The Spaniard has played at Queen's five times and on each occasion went on to reach the Wimbledon final a few weeks later, winning the grasscourt major in 2008 and 2010.
Since his last visit to the Queen's Club lawns in 2011, however, Nadal's luck at Wimbledon has run out, losing in the second, first and fourth rounds.
The world number three adds to an already strong cast at Aegon Championships at the select west London club where former home favourite Andy Murray, defending champion Grigor Dmitrov and U.S. Open holder Marin Cilic are already committed to play.
"I'm very happy to be back. Queen's is a great event, I always enjoyed it, I had some great feelings there, the atmosphere of the club -- a real tennis club -- is very special, the courts are unbelievable and I'm very happy to be back," Nadal said in a statement on Monday.
"I enjoyed Halle but the results have not been perfect for me in Halle, so I want to try Queen's again where the grass courts are a little bit more similar to Wimbledon."
Britain's tax laws were cited as one reason nine-times French Open champion Nadal decided to stop playing at Queen's.
Tournament director Stephen Farrow said it was great to have the 28-year-old back.
"Rafa is one of the greatest tennis players of all time and he is universally popular, so this is fantastic news for the Aegon Championships and our spectators," he said.
"We have stayed in contact with Rafa and his team over the years and we always hoped he would return one day."
This year's Queen's tournament has been upgraded to an ATP 500 and will begin on June 15, a week later than usual to allow players more of a grasscourt swing.
(Reporting by Martyn Herman)
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