The Clarets recently agreed a deal in principle for the midfielder to sign for them in the January transfer window.
The issue had been complicated by a Football Association probe into alleged betting, with Barton facing a possible fine and suspension after being charged for allegedly placing 1,260 bets over a 10-year period.
But Burnley announced shortly after Saturday's 2-1 loss at Manchester City that Barton's return to the Turf Moor outfit had been finalised.
The Clarets also revealed the one-match suspension Barton - who left Burnley to join Rangers over the summer - was handed in November by the Scottish Football Association for breaching betting regulations has now been served.
A statement from the Premier League club read: "Burnley Football Club can confirm that following detailed discussions regarding the recent FA charge brought against Joey Barton, the club have now reached an agreement with the player and his representatives over a contract with the club until the end of the season.
"Barton becomes available for selection from January 3 after completing his registration in time to serve a one match suspension against Manchester City, as a result of a carry-over suspension passed down from the Scottish FA relating to a previous offence."
Burnley's next match is Saturday's FA Cup third round tie at Sunderland.