Head coach Alan Solomons said: "We're delighted to be able to bring Fraser back home to Edinburgh and believe he'll really add value to the squad.
"He's a big, abrasive player who will fit in well to our system."
McKenzie joined Edinburgh Rugby in 2008 from Scottish Rugby's national academy, having turned out for Dunfermline's 1st XV when he was 16. The Queen Anne High School former pupil led his country at under-19 level in the April 2007 World Championships having already represented Scotland at under-20, when he made a try-scoring debut against Wales in February that year.
McKenzie said: "I jumped at the chance to come back to Edinburgh Rugby and I'm looking forward to laying down a marker.
"The club seem to be on an upward trend and I'm looking forward to returning to my home-town club and to be back living in Dunfermline.
"I really believe everything happens for a reason and I think the time is right for me to come back."
The lock, who can also play on the blind-side, made his Scotland 7s debut in November 2008, represented Scotland A in 2010 and 2011, and was included in the extended Scotland squad for the 2012 RBS 6 Nations.
Moving from Edinburgh Rugby to Sale Sharks in 2011, he then joined Newcastle Falcons, last summer, playing for them on 14 occasions.
Edinburgh Rugby assistant coach Stevie Scott, who worked with McKenzie most recently during his time with Sale, said: "I've known Fraser for a number of years, from coaching him at the academy to his time at Sale. He's a hard, physical player and I'm sure he'll suit the way we're trying to play our game."
Fraser Rolland McKenzie
Position: Lock
Born: 28 March 1988 in Dunfermline (age 26)
Height: 1.98m (6ft 6in)
Weight: 119kg (18st 10lb)
Edinburgh Rugby supporters will be able to cheer on the team in their home fixtures as part of the newly launched Season Ticket.
Fifteen matches - eleven PRO12 league games and the three home tie European Rugby Challenge Cup games, plus the pre-season friendly against the Tigers, are included in the season ticket offer. Prices range from £225 for a reserved adult ticket to £50 for a roving under-18. Deals for senior citizens, students, young people (aged 18-21) and families are also available and payment can be made by instalments.
For further information and to purchase a season ticket online, go to edinburghrugby.org/season-tickets.
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