The 27-year-old centre, who has represented the British and Irish Lions as well as earning 48 caps for Wales, will be back with his home region after two years at French Top 14 club Clermont Auvergne.
Davies is the 17th player to sign a national dual contract, one of the joint agreements made between the WRU and the professional Welsh regional teams.
"I am delighted to be returning to the Scarlets," Davies, who missed the recent World Cup through injury, said in a WRU statement.
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"The joint commitment between the WRU and regions is driving for success and I believe the time is right to return to Wales and signing an NDC (national dual contract) is the best decision for me rugby-wise."
Ospreys players Scott Baldwin, James King, Dan Baker and Rory Thornton last week signed NDCs, following major names like captain Sam Warburton, Alun Wyn Jones and Dan Biggar.
"His (Davies's) return demonstrates the value of the NDCs as a means of ensuring as many of the most talented players as possible play their rugby here in Wales," WRU chief executive Martyn Phillips said.
(Writing by Ian Chadband, editing by Ed Osmond)
