Judy, who found fame hosting This Morning with husband Richard Madeley, has been largely absent from screen since their chat show ended in 2009.
She is one of four new faces joining the lunchtime panel show, which begins its 19th series.
CLICK ON PHOTOS TO ENLARGE
Judy Finnigan is returning to TV as a panellist on Loose Women
Penny Lancaster, wife of Rod Stewart, Gloria Hunniford and Sharon Osbourne have also joined the show.
They will sit alongside regular panellists Andrea McLean, Coleen Nolan, Ruth Langsford and Janet Street Porter.
Judy and Richard launched This Morning in 1988, and worked together hosting TV shows for 21 years - lost recently on digital channel Watch in 2009.
In 2010, husband and wife both said they had no plans to return to TV, either together or apart, stating that they "didn't miss it in the slightest".
But Judy, 66, said the she couldn't resist the chance to work on Loose Women.
Penny Lancaster, Sharon Osbourne and Gloria Hunniford
"I know I said I wouldn't go back on the telly," she said. "But actually I'm looking forward to occasionally contributing to lively conversations between a group of outspoken and intelligent women."
Her co-star Penny, meanwhile, said, "Having appeared on Loose Women in the past as a guest and had such a good time, I'm really thrilled to become a panellist."
The mum-of-two, who spends much of her time in LA, added, "I'm looking forward to spending more time in Britain and my lunchtimes with the girls debating a broad mix of topics."
Former X Factor judge Sharon said, "The last time I was a Loose Woman earlier this year I had such a ball with the other panellists and the audience I can’t wait to do it again.
"It's refreshing to be able to talk about real issues with other women while having a great laugh at the same time."