The 28 year-old has signed a one-year contract with Ulster meaning that he will be at Kingspan Stadium until at least the summer of 2016.
Faloon came through the ranks at the Ulster Academy and represented the senior Ulster team on 63 occasions between 2008 and 2012. He joined Connacht at the start of the 2012 season and has played 39 times under both Eric Elwood and Pat Lam over the past three seasons during which he has scored six tries.
Speaking about the move, Faloon said:
"While I am pleased to be returning to Ulster, I want to thank the coaches and fans of Connacht who have backed me over the past three seasons.
"I have thoroughly enjoyed my time in Galway and in the next few months I am completely focused on helping Connacht be successful in both the PRO12 and the European Rugby Challenge Cup."
Connacht Rugby Head Coach, Pat Lam said:
"When Ulster Rugby approached us about the potential move, the first thing we did was sit down with the player and discuss the different options. There was an opportunity for Willie to play first team rugby for the province where he is from and we were all supportive of the decision which wasn't taken lightly.
"Willie is an excellent team man and someone who really bought into the Connacht culture and earned the upper most respect of his team mates and coaches. I know that he will continue to give his all for Connacht for the remainder of the season and we wish him all the best with his career at Ulster."
Connacht Rugby CEO Willie Ruane added:
"This move is an example of the provinces working together for the benefit of each other and of course the player in question. Willie is a talented openside flanker who has brought a lot to the position at Connacht and we wish him well in his future with Ulster.
"Competition for places in the senior squad is at a premium and we have the likes of Jake Heenan, Eoin McKeon as well as Academy prospects Eoghan Masterson, James Connolly and Rory Moloney all vying for the number 7 shirt. We are fortunate to have this level of squad depth in the position."
Ulster's Team Manager, Bryn Cunningham, added:
"Willie has a hard edge to his game and he will provide us with another excellent option at PRO12 and European level.
"He has been in fantastic form for Connacht this season and he will come home to challenge for the number 7 jersey.
"Such competition for starting places only serves to drive up performance levels across the board, therefore I am delighted to see Willie coming back to Belfast."
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