The 24-year-old left Tannadice to join Blackburn in the summer of 2011 and went on to score five goals in 34 appearances.
The Scotland international now has the opportunity to continue a Terrors career that saw him net 40 times in 136 games.
United manager Jackie McNamara said: "I am very excited by this signing. We are not only getting an experienced international player but we are also getting someone who has a special affinity with the United fans.
"I am striving to improve Dundee United in both the short and long term and adding a player of David's quality will help achieve that.
"He has all the attributes needed by a striker and it will be a major boost to the club to have him here.
"This signing will also excite our supporters. A lot of hard work was done behind the scenes to ensure this deal went through and I have to praise the board who gave the financial backing to this deal."
Club director Derek Robertson said: "In working on this deal for several weeks we have listened to what the fans have said.
"After contacting a large number of fans who have still to renew their season ticket it was apparent that many were awaiting some exciting transfer news.
"It doesn't get much more exciting than this and I hope these fans will now come out and support the club's efforts.
"This signing shows the calibre of player the manager is looking to further add to the squad but in order to do so, we need to encourage more season ticket sales."