Despite also signing a new contract at Carrow Road, the England Under-21 keeper will return to the Lilywhites having spent the latter part of last season on loan at Deepdale.
"Declan was very impressive last year and it's fantastic that Norwich have allowed us to have him for a season-long loan," Grayson said in an official club statement.
"I think it's a testament to the football club that Norwich were keen to get this deal done as quickly as possible with a player that they think highly of."
Rudd made 15 appearances during his time with the club last season, keeping seven clean sheets in the process, and is excited at the prospect of spending an entire campaign with the League One club.
"As soon as last season finished I wanted to get a deal done to come back for a full season," the 22-year-old said.
"When I was away with the England Under-21s I was constantly in contact to get things sorted and thankfully I got back and two days later it was sorted and it is great to have it done and I can't wait to get started now."