The former Sri Lanka captain has been one of the most successful coaches in the Twenty20 league format, having guided the five times IPL champions to three titles during his initial tenure.
Jayawardene, 47, previously held the head coach role from 2017 to 2022. After Jayawardene's promotion to the global role, Mumbai Indians had appointed former South Africa wicketkeeper Mark Boucher as head coach.
The franchise finished last in the IPL in 2024 and fourth in 2023 with Boucher at the helm.
"We are thrilled to have Mahela back as the head coach of Mumbai Indians. With our global teams having found their footing within their ecosystems, the opportunity to bring him back to MI arose. His leadership, knowledge, and passion for the game have always benefited MI," Mumbai Indians co-owner Akash Ambani said in a statement on Sunday.
"I would also like to take this opportunity to thank Mark Boucher for his contribution over the last two seasons. His expertise and dedication were pivotal during his time, and has now become an integral member of the MI family."