The 29-year-old – the Glassboys’ seventh summer signing – scored 24 goals in the 2018/19 season, but left in October 2019.
However, he is thrilled to be back, where he will link up with new boss Mark Yates.
Mills said: “I have some fantastic memories from my time here at the War Memorial Athletic Ground, and I’m really looking forward to wearing the shirt again.”
The news comes a day after the Glassboys announced the signing of former Wolves left-back Ben O’Hanlon.
O’Hanlon had most recently been plying his trade at Hednesford Town, having had spells at Corby, Nuneaton and AFC Telford United while with Wolves.
Halesowen Town also bolstered their squad this week, with the signing of striker Richard Gregory from Bromsgrove Sporting.
Kidderminster Harriers have announced the return of Amari Morgan-Smith, who played for them 2013-14. The Wolverhampton-born striker was at AFC Telford United recently before a spell with Alfreton Town.