The 28-year-old former Arsenal player had agreed a deal until the end of the 2014/15 season, Sevilla said in a statement on their website.
"He is coming home eight winters after leaving for Arsenal for a juicy amount of money which turned out to be fundamental in the construction of the current Sevilla team," the statement said.
Reyes told a Spanish newspaper on Sunday he had decided to leave Atletico even though new coach Diego Simeone was counting on him and said his father's health had been a factor in his decision to seek a move.
Local media have reported that Sevilla will pay Atletico 3.5 million euros to take him back plus bonuses.
He moved to Arsenal in 2004 for a fee of around 17 million pounds, a club record for the English Premier League side at the time.
However, he struggled to adapt to life away from home and was loaned to Real Madrid two years later before signing for Atletico in 2007.
He had been left out of the Atletico starting XI in recent games after clashing with coach Gregorio Manzano, who was sacked last month and replaced by former Argentina captain Simeone.
Reyes made 21 appearances for Spain, scoring four goals, and last played for the world and European champions in August 2006.
