The winger came through the Tigers' academy and went on to make 38 first-team appearances, scoring 24 tries.
However, he left in search of more regular action in 2015 and subsequently enjoyed decent spells at both Bradford and Leigh.
Castleford-born Clare has now rejoined his hometown club, signing a one-year deal, with the option of a further 12 months.
The 26-year-old admits he is glad to be back and is relishing the prospect of playing for his hometown club again.
He told the club's official website: "I'm very excited to be coming back to the Tigers. Cas is the club that I've supported for my entire life so to be back here and to have another chance to pull on this famous shirt is great."
His thoughts were echoed by boss Daryl Powell, who says the improvements he has made in his time away from the club make him ready to challenge the likes of Greg Minikin, Greg Eden and Jy Hitchcox for a regular place on the wing.
Powell added: "James has strengthened and got bigger physically as a player during his time away from the club and I think he will really challenge the players on the wings to be right on top of their games.
"I am looking forward to seeing how he goes. He has got a great opportunity now to show us what he is all about."