Reds Head Coach Lee Johnson said, "I'm sure I don't need to tell the Barnsley fans what Adam is capable of. We are delighted to have him on board.
"He has a great pedigree, he's quick, direct and will get crosses into the box. He's an exciting addition to our squad and he's a player I'm sure will add goals and assists."
Hammill celebrates his goal against Preston for the Reds in November 2010.
Now 27, Hammill endeared himself to the Reds faithful in the Championship back in 2009 on loan before joining permanently from Liverpool in August the same year.
He went on to net eight goals in 27 games in the first half of the 2010/11 campaign, his blistering form prompting Wolves to take the winger into the Premier League.
Lee Johnson added, "I'm sure the fans are just as excited as I am to see him back in a red shirt. He's turned down interest from elsewhere because he feels at home here and we're delighted to have him back."
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