The U's sacked Garry Monk last weekend as they sit rock-bottom of the League One table with only five wins from 31 matches.
Monk joined the club in March 2024 as their successor to Harris, with the change made as Cambridge fight for survival.
Harris returned as their head coach and his predecessor at the club, ex-Gillingham boss Mark Bonner, has also made a comeback, this time as director of football.
In a statement on Wednesday, the club's majority owner Paul Barry said: "Neil Harris is returning as head coach on a contract until June 2027.
"He made a significant impact at the club over a short period last season. He is a winner and his track record as a head coach speaks for itself.
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"He will obviously work very closely with Mark, who has been leading conversations with him over the last 48 hours.
"Clearly, Neil left us in a unique set of circumstances last season, and we all feel there is unfinished business for him at Cambridge United."
Harris first joined as head coach in December 2023 but spent just two months at the club before returning to former side Millwall.
However, he departed at the end of 2024 and shortly after he made a derogatory comment towards some Millwall fans.
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On Bonner's appointment, Barry said: "Mark Bonner will be returning as our new director of football.
"He knows the club inside out - its strengths, its culture and values, and also the areas that we must seek to improve.
"He is an exceptional individual and we believe his leadership, strategic thinking and deep understanding of the game can make him an outstanding Director of Football for us over the long term.
"He will undertake the second part of the football review as the planning starts now to get ready for next season - alongside fighting to stay up."
Bonner became Cambridge's manager in March 2020 and sealed their promotion to League One the following year.
He signed a long-term deal at the club in September 2023 but left only two months after, before joining League Two side Gillingham last summer.
Harris and Bonner held a joint press conference together on Thursday, with the latter describing his once successor as the 'perfect fit'.
Bonner said: "His record speaks for itself. We don't need to spend too long discussing how competitive Neil's teams can be, how successful he's been, the success he's had this year (at Millwall) and the impact he had on the team (at Cambridge) when he joined. All of the traits of a Cambridge team at it's very core, I think Neil's teams play with them.
"We see the game similarly and we understand how to build winning teams in League One and League Two.
"There will be points of difference but fundamentally the values we have are really similar. The way in which a team at this club should play to be really competitive and give itself the best chance of winning are really similar.
"And then the differences of opinions that we'll have - or the slight differences in our personalities - that's really good and healthy to drive debate and drive things forward.
"We need a real energy and real intensity about the club. We need a real drive and attitude to winning and being hard to beat.
"Neil brings all of those things and for me it's a perfect fit. We've seen a small snippet of that in the recent history. I wasn't here for that but I know what it was and I believe that over the coming couple of years we'll see that again."
Bonner, who was sacked by Gillingham in January after eight months in charge, was also keen to dismiss a potential conflict of interests.
He added: "I wasn't coming back to do the job that Neil is doing. I don't want that job. I've done that job and I'm not going to do it again here.
"It's really simple for me. Our jobs are really different but we're going to work closely together and the experiences I've had in that role, I think can support Neil in a good way.
"But that's (head coach) not the job here for me. It's sitting in the background and trying to create conditions for whoever is in that (head coach's) seat to be successful."
Harris said: "We're a team. The beauty for me with Mark being in his role is that he knows the football club. He knows what good practice is and what good culture is.
"He knows what makes Cambridge United tick from growing up in the area and being a fan.
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"Probably the biggest support network for me is that he's been a current manager. It's difficult to coach and manage in the modern game, so to have somebody that knows it and it has lived it recently is a huge bonus for me. We're convinced it's going to work really well.
"It's a lot nicer to have Mark sat there than anything different because when I need a moment of comfort or a strong opinion, Mark will certainly give that to me."