The 25 year-old - who has played for Australia four time - signed a one-year deal with an option for a permanent switch.
"I'm really looking forward to returning to the A-League, playing under Kenny Lowe and joining up with the team he has assembled at Perth," Nichols said.
" had options to stay in Japan and even go to Europe on loan, however I wanted to come back to the A-League.
"I'm excited at what is happening at Perth Glory both on and off the field and at what I think we can, as a team achieve this season."
Nichols flew out of Japan on Thursday night and will join up with his Glory team-mates for pre-season training next week.
Attacking midfielder Nichols won two A-League titles with Brisbane Roar, including the 2012 version after the dramatic 2-1 win over Glory.
He signed for Melbourne Victory in 2013 and played 14 games last season before sealing a move to J.League side Cerezo Osaka in January.
"Mitch is a very exciting and accomplished A-League player and someone we’re obviously very pleased to have been able to bring into the squad." Glory coach Lowe said.
"He's won championships, he has a winning mentality and I believe he will fit in really well with the squad we've assembled.
"He'll be in Perth very soon and with that we'll then have the next four months of pre-season, all together, getting prepared for the A-League season” Lowe added.
Perth has been active in the transfer market with Nichols to join Republic of Ireland striker Andy Keogh, Western Sydney Wanderers's Dutch attacker Youssouf Hersi, Newcastle Jets captain Ruben Zadkovich, Diogo Ferreira from Brisbane Roar and former Socceroos defender Dino Djulbic in a revamped roster for the 2014-2015 campaign.
"The players that Kenny has attracted to the club during the off season really shows intent and demonstrates the ambitions that the club has" Nichols said.
Perth's opening game of the new season is at Wellington Phoenix on Sunday 12 October.