The Spaniard will return to the manufacturer for which he drove from 2005-10, having spent the past two seasons with Prodrive's Mini operation.
Sordo had been fighting against leading Ford privateer Mads Ostberg for the Citroen nod.
The team had been hunting for a new team-mate for Mikko Hirvonen following Sebastien Loeb's decision to switch to a part-time programme for next season.
Citroen team boss Yves Matton said Sordo's speed in Spain last weekend, where he crashed on day one but took six stage wins under Rally 2 conditions thereafter, had been a key factor in the choice.
"We took our time in assessing the potential of the drivers available to line up alongside Mikko Hirvonen next season," said Matton.
"Obviously, Dani was very high on our shortlist and his performances at the Rally de Espana proved that he can still perform at the very highest level."
Matton added that Citroen's previous familiarity with Sordo and the potential for a nationality balance alongside Scandinavian Hirvonen were also considered.
"Dani is very well liked in the team and it's a pleasure for everyone to see him return to 'the family,'" said Matton.
"His profile complements Mikko's in many aspects and it was important for Citroen to have a Latin driver for the Southern Europe and Latin American markets."
Sordo had also been in contention for Prodrive Mini and M-Sport Ford seats, but said the factory Citroen operation had always been his preference.
"Obviously, I'm very pleased to rejoin a team with which I share so many good memories," said Sordo. "This was my number one choice for 2013."
The 29-year-old Spaniard won the 2005 Junior WRC title with Citroen and was brought into its WRC line-up as Loeb's number two during the following season.
Sordo stayed with Citroen until the end of 2010, when he lost his seat to Sebastien Ogier and switched to Mini. That deal became a partial programme this season when Prodrive lost its factory support, and Sordo was able to drive for Ford at two events after Jari-Matti Latvala was injured.
Although Sordo has yet to win a WRC event, the 25-time podium finisher said he would return to Citroen a stronger driver than before after his experience elsewhere.
"The last few years have been good for me," he said.
"In another team, I got to grips with different working methods and I took on more responsibility in the car development process.
"I see this return to Citroen as a great opportunity. I am still looking for my first win in WRC and I am determined to secure it next season."
It is not yet clear how many rallies Sordo will do, as he is expected to move aside for Loeb when the Frenchman returns to contest selected events.
Citroen's decision means Ostberg will now make a straight choice between Prodrive Mini and M-Sport Ford for his 2013 World Rally Championship deal.
Despite the Citroen decision going against him, Ostberg remained upbeat about his 2013 prospects.
"This is definitely not a disaster," he said. "Citroen wasn't my main choice, it was a choice for next year. Now it's between Ford and Mini. Volkswagen is all sorted for its drivers."
Ostberg has extensive knowledge of both Prodrive and M-Sport, having contested 17 WRC rounds with Prodrive-built Subaru and 25 with an M-Sport built Ford.
"I am happy with either team," he said, "I have good experience with them both. Now I have to think about things and make a decision. I think we will know in one or two weeks where we are going."
One of the key elements in Ostberg's decision will be the potential test programme on offer in any deal.
"This year, I did seven test days and that's just not enough if you want to fight with the other guys," said Ostberg, who drove a satellite Ford for his family's Adapta team in 2012.
"I believe I am ready to win next season, but to do that I need to be well prepared and I need testing to be well prepared."
Ostberg finished fourth in the 2012 WRC standings despite only contesting 11 out of 13 rounds. He picked up his maiden WRC win in Portugal when Mikko Hirvonen was disqualified from first place for a technical infringement.