The 38-year-old made his first-class debut for the island state in 2011 and sits fifth on the overall Shield wicket list with 408.
Bird has spent the past two seasons with NSW, taking 58 scalps including 34 at an impressive average of 17.20 in 2024/25.
He will join a squad of Tasmania fast bowlers including Riley Meredith, who recently inked a two-season extension.
Bird, who has played nine Test matches for Australia, could feasibly finish his career as the second-greatest Shield wicket-taker of all-time.
He sits behind Jo Angel (419 wickets), Andy Bichel (430) and Michael Kasprowicz (441) in a list headed by Clarrie Grimmett (513).
Bird has taken 350 wickets for the Tigers and was part of teams that finished runner-up in 2011/12 and 2017/18.
"I'm so pleased we've been able to find a role for Jackson that has been mutually beneficial," Cricket Tasmania high performance general manager Salliann Beams said.
"Our bowling stocks were tested last season through injury, and the experience of Jackson will give us another reliable option."
South Australia's title breakthrough this year means Tasmania is the state with the longest drought - last winning the Shield in 2012/13.
16°C