The former England manager led the Enschede-based side to the first Eredivisie title in their history back in 2009-10, before leaving to join Wolfsburg.
Twente parted company with coach Co Adriaanse on Tuesday, and despite reports linking Avram Grant with the vacant post, McClaren has returned to his old stomping ground.
The 50-year-old feels that it is an excellent opportunity for him, and he is looking forward to continuing the progress he made in his first stint with the club.
“I left, obviously, on a high with the title. I said at that time that I would be back. I didn’t know when, but I would be back,” he admitted to Sky Sports.
“The club is still developing, still growing and I think this is an ideal opportunity for me to go back and finish what we were starting.”
“I know the club very well. I know the people at the top. I can work with the people at the top.
“I think that is the most important thing. I had a good relationship with them the last time. I know where the club is coming from.
“I know what their vision is. I know what their ambitions are. It is still there. That was the key thing for me,” he concluded.
By Gareth McKnight