Shevchenko, 32, Ukraine's most famous player and at his peak one of the deadliest strikers in the world, put two difficult years behind him and told reporters at a news conference: "I am truly very happy to have returned to my home club.
"I have spent 10 years of my life in various European countries - at Milan and Chelsea - and the time came to return."
Shevchenko, who has scored a national record 41 goals in 87 appearances for Ukraine, believes Dynamo can mount a challenge in this season's Champions League and he will return to the San Siro in October when they play Italian champions Inter Milan there in the group stage.
Dynamo also face European champions Barcelona and Russian champions Rubin Kazan. "We have to do some serious work now," Shevchenko said. "We are in a very, very good group, a very strong group. And the stronger it is the better it is for us, I think.
"The team is ready and we can play very well in the Champions League and may God give us success."
