Cahill played 251 matches at The Den between 1998 and 2004, scoring 57 goals before leaving for Everton and the Premier League.
The 38-year-old has been without a club since parting ways with Melbourne City last month and has his sights set on a fourth consecutive World Cup berth with the Socceroos.
The Socceroo completed a medical at The Den on Monday before signing alongside boss Neil Harris and CEO Steve Kavanagh.
Cahill will be presented to Millwall fans before Tuesday’s Championship clash against Derby County, though he won’t be available for selection.
“I’m coming home” Cahill tweeted.
“The romance of the story is definitely not lost on me. I’ve always said that if I came back to England, I’d come home,” he told the Millwall website.
“It’s an amazing feeling. “To finally come home and to join Neil Harris, David Livermore and all the lads will be really special.
“I can’t wait to greet the fans, meet my new teammates – it’s one of those things where it’s meant to be.
“Millwall is where I learnt my trade and it was the most important learning period of my life – my apprenticeship in understanding football.
“To come home to where it all started, it’s emotional, but it’s happy emotions, because you wish for it to happen, you want it to happen, but when it finally comes to fruition, it’s the perfect move.”
Cahill will be out to impress new coach Bert van Marwijk before the Socceroos meet France, Peru and Denmark in Group C at the World Cup in Russia in June.
Millwall are still in the FA Cup and if they beat Rochdale a potential showdown looms against Tottenham Hotspur who are favourites to beat Newport County.
“The players will thrive off the enthusiasm that he brings,” said Harris.
“When I played with him, I appreciated what he did. Since then, I’ve followed his career and admired what he has done and I know full well what he can bring to my dressing room.”
Cahill also enjoyed spells with New York Red Bulls (US) and Chinese clubs Shanghai Shenhua and Hangzhou Greentown, after leaving England.
Local News Matters
Media diversity is under threat in Australia – nowhere more so than in South Australia. The state needs more than one voice to guide it forward and you can help with a donation of any size to InDaily. Your contribution goes directly to helping our journalists uncover the facts. Please click below to help InDaily continue to uncover the facts.