The club announced the 30-year-old Canadian's return after tonight's game against Coventry Blaze.
His stay at Zagreb Medvescak KHL ended last week, and despite bids from several other teams across Europe, Sheffield were able to meet his demands.
He should be available for Wednesday's Challenge Cup quarter final second leg at Guildford Flames.
Armstrong had two seasons with Sheffield, last season interrupted by a finger injury, when he was a leading scorer.
His return should reinvigorate the offensive capabilities of the side, and follows the return of three other players who either left or were discarded by former coach Paul Thompson.