He said his motivation was to finally win an Australian Superbike crown, having finished runner-up in the series in 1996 and '97 before heading to Europe.
Bayliss admitted he had come close to joining the series midway through this year to replace injured rider Callum Spriggs.
"Initially, I did want to see another young guy on the bike but after I rode it, I felt that I needed to contest the championship and try and win myself the elusive Australian Superbike title," said Bayliss.
"I definitely feel like I have some unfinished business.
"I have a bit of work to do in terms of fitness but after testing the bike and running it at the Adelaide Motorsport Festival I feel I am definitely up to the task."
Image credit: Twitter
Ducati Australia and New Zealand CEO Warren Lee said getting Bayliss back on a bike was a big coup for the series.
"When he was racing in the world championships and since returning to Australia, Troy has always been such a great ambassador for Australia and our motorcycle sport and industry," said Lee.
"His passion for motorcycling and 'putting back in' attitude is why he is Australia's and one of the world's most popular and liked riders."
Bayliss won the 2001, '06 and '08 WSBK titles as well as the 1999 British Superbike crown.
He spent three seasons in MotoGP from 2003-05, then famously returned for a one-off with Ducati in the 2006 title decider at Valencia (pictured above) and took what his sole MotoGP race victory in his final appearance in the series.