Cole returns to the club where he started his career and rose through the ranks before leaving for Chelsea following the Hammers relegation in 2003.
“It is a great move for me,” Cole told the official site. “Coming back here brings back all the memories of the pitches I learnt how to play on. This is where I learnt my trade and I’m happy to have another chance to be here. I’ve always loved West Ham and I hope I can give the club a few memorable seasons.
“The timing was right for me to come back and I’m happy. I’m back in London and I’m delighted to be here. I want to be here and I want to make an impact.
“The place has not changed much to look at, but I think Sam has done a great job with the team. A few years ago, the club was in a bad way and Sam has done brilliantly. All in all, it will always be West Ham and the history will always be here and everywhere I go around the world, people love West Ham. Everywhere I go, people know me for having started here.”