The 27-year-old has had two previous spells at Easter Road and will again link up with Neil Lennon's squad ahead of season 2019/20.
Allan began his career at Dundee United and has also played for West Brom, Portsmouth, Birmingham City Rotherham United and Dundee.
Hibs boss Lennon told the club website: “It's no secret that Scott is a player I admire and wanted back at Hibernian. He’s a player who suits the attacking brand of football we like to play.”
