The 34-year-old forward passed a medical on Wednesday afternoon before the move was confirmed, bringing him back to Liguria for the first time since his permanent transfer to Milan in the summer of 2011.
El Shaarawy first arrived at Genoa's academy in 2006 from Legino, the Savona club where he took his earliest steps in the game, and made his senior debut for the Rossoblù on 21 December 2008, coming on for the closing minutes of a win over Chievo.
He went on to make 30 appearances and score nine goals for Genoa, including a loan spell at Padova, before his move to Milan launched a career that also took in Monaco, Roma and a spell in China with Shanghai Shenhua.
"With Genoa I experienced my first joys as a professional, I lived my first emotions and coming back to wear this shirt is a bit like closing a circle," El Shaarawy said in the club's official statement.
"Being back home fills me and my family with pride: Genoa is part of our DNA and the desire to fight for these colours and these supporters is a drive I feel very strongly. Forza Grifone!"
Genoa's chief of football Diego Lopez said the move reflected mutual desire between player and club.
"We wanted Stephan strongly and he wanted us strongly," Lopez said. "We know what he represents for this club and what this club represents for him. We're happy to be able to embrace him again at Genoa: with him we grow in class, experience and identity."
The move also reunites El Shaarawy with head coach Daniele De Rossi, who was his team-mate at Roma between January 2016 and 2019 before later managing him at the same club.
Having been strongly pursued throughout the closing days of the window and repeatedly described as a genuine target, the switch was completed only in the market's final hours, bringing a player once considered among Serie A's brightest prospects back to the city and the club where his story in professional football first began.