The 35-year-old made his first-class debut at Warwickshire back in 2005 before opting to join the Pears one season later.
Ali has been with Worcestershire ever since, racking up almost 350 games across all formats. During those outings, the player has gone on to score in excess of 13,000 runs and over 300 wickets.
The Birmingham-born all-rounder has helped the side to three trophies during his spell, including the 2018 Vitality Blast crown. Nevertheless, Ali has now decided to take care of some unfinished business as he heads back to the club at where it all started.
Yorkshire also showed interest in the player, but ultimately he opted for a return to his hometown club and signed a three-year white-ball deal with Warwickshire. The deal also includes the option of playing red-ball cricket on a pay-as-you-play basis.
"I'm delighted to return home to Edgbaston," Ali said. "I was born and raised just a few miles away from the stadium, with my life always centred around Birmingham.
"When the opportunity presented itself, it was a decision I couldn't say no to and I believe I have unfinished business at the Bears.
"I'm incredibly excited to be back and to play in front of the best atmosphere in world cricket. It's a place that has so much history and players always have memories and stories of playing here.
"I'm looking forward to contributing and be part of hopefully something special."
On leaving Worcestershire, he added: "I'm sad to be leaving Worcestershire after so long and have loved every minute of it. I've played with some amazing people and owe a huge thanks to the club for bringing me here and giving me the platform to perform."
While Ali did retire from Test cricket last September, the all-rounder did admit that he would reverse that decision should he receive a chance to play in England's tour of Pakistan later this year.