The 31-year-old will play for Paraguayan third division 12 de Octubre, the club where he began his career in 1997 in Itagua, 30km from Asuncion.
"I'm really well... it's very nice to recall old times, when I started out, very young at 15. I felt really proud [then]," Cabanas said at his official unveiling on Friday.
"We'll be out on the pitch again at any moment," he added as he sat beside team coach Rolando Chilavert, who said Cabanas would have to earn a first team place.
Club president Luis Salinas, speaking to Reuters earlier on Friday, said: "He always wanted to return to the club where he was born [as a player] and where he feels at home.
"On Monday he will put on the [team's blue and white] gear and start training."
"Salvador is well. He's lacking a few things like rhythm, speed, but he'll still continue with his treatment at the same time as he practices with his club," his father Dionisio said.
"This is something very emotional for the family because we've suffered a lot," he said.
Part of Cabanas's recovery has included practising as a guest with leading Paraguayan first division side Libertad since February 2010.
