Incumbent captain Ardie Savea will play his rugby in Japan next year, and Shields has been signed to the side he left in 2018. During the first half of his career, he played 103 games for the Hurricanes and led them to a 31-31 draw with the 2017 British & Irish Lions.
Shields was a New Zealand Under-20 international and was included in All Blacks squads in 2012 and 2016 without getting the call-up. He left the Hurricanes in a bid to play Test rugby and secured his nine caps for England but was unable to win a World Cup place with the side in 2019 due to injury.
Later he suffered upheaval when Wasps went into administration with redundancy resulting in Shields moving to France to play for the Perpignan club on a short-term contract.
Shields said it was exciting to be returning home.
"It's been a crazy few years, so I'm grateful to the 'Canes for giving me an opportunity to come back to Wellington and experience some Super Rugby again. I've been supporting the team from afar.
"I'm hoping I can share the experience and knowledge that I have going over the last few years and give back to the club that has given my family and myself some amazing opportunities."
Shields was excited about joining some old teammates and meeting the newer side members.
Coach Jason Holland said Shields was integral to the Hurricanes before leaving.
"We know his qualities as a leader, and he is playing great rugby in France at the moment, and before that with Wasps.
"We can't wait to get him in to compete with the young talent we have in our loose forwards mix."