The 23-year-old played four times in the competition for Yorkshire last summer, scoring 113 runs.
Head is a current member of Australia's one-day squads, playing 22 one-day and seven T20 internationals since making his debut in January 2016.
"I would like to help the team go further than last year and hopefully win the T20 Blast," said Head.
The left-hander played for hometown side Adelaide Strikers during this winter's Big Bash League, hitting 76 runs in his five innings.
He will join up with fellow Australia international batsman Peter Handscomb, who has signed to play in all three formats, at Headingley.
Yorkshire first-team coach Andrew Gale added: "It was a no-brainer to bring Travis back. If we had the opportunity to bring him back, we were always going to.
"He has gone from strength-to-strength since he left us last summer, getting into the Australia team and being a consistent performer for them."
Yorkshire have re-signed Australia one-day batsman Travis Head as an overseas player for the 2017 T20 Blast campaign.