Contract terms were not released, but reports indicated he got a two-year deal worth $10 million.
Pippen, 37, who helped the Bulls win six NBA titles in the 1990s, is a seven-time all-star and two-time Olympic gold medallist.
"I've always been a Bull in my heart, and now I will play where my heart is," Pippen said. "I love this city and the Chicago fans, and even if I've had my highs and lows with this organization, I'm comfortable here and confident in the people in place today."
Pippen has played for Portland the last four years, and also spent one year with Houston. The six-time NBA All Defensive First Team member also is one of the NBA's 50 greatest players.
He has averaged 16.4 points, 6.4 rebounds, and 5.3 assists in 1,155 games.