James made the announcement in a first-person essay on Sports Illustrated's website.
"I always believed that I’d return to Cleveland and finish my career there," James told SI's Lee Jenkins in the essay. "I just didn’t know when. After the season, free agency wasn’t even a thought. But I have two boys and my wife, Savannah, is pregnant with a girl. I started thinking about what it would be like to raise my family in my hometown. I looked at other teams, but I wasn’t going to leave Miami for anywhere except Cleveland. The more time passed, the more it felt right. This is what makes me happy."
Prior to agreeing to return to Cleveland, James – along with his agent Rich Paul and business manager Maverick Carter – met with Cavaliers owner Dan Gilbert for four hours in Miami and mended their relationship, which fractured after Gilbert blasted James in an open letter four years ago shortly after James' televised announcement he was leaving for Miami.
Moments after James' announcement on Friday, Paul called Gilbert with the news: "Dan, congratulations. LeBron is coming home."
"Just happy for the people of Cleveland," Gilbert told Yahoo Sports in a text message. "We are driven at the core by one thing: delivering the city a championship."
James returns to Cleveland a far more evolved and capable leader, a superstar able to mold a young team into a contender. The Cavaliers signed their young franchise point guard Kyrie Irving to a five-year, $90 million extension on Thursday and added Andrew Wiggins to the roster last month as the No. 1 pick in this year's NBA draft.
James also will be joining a new coach, David Blatt, who is transitioning to the NBA after a successful career coaching overseas.
Asked if he's thrilled for the opportunity to coach James, Blatt told Yahoo Sports: "That would be the understatement of the millennium."
After four consecutive trips to the NBA Finals that included two championships, James is breaking up his partnership with Dwyane Wade and Chris Bosh. Bosh is finalizing an agreement to stay in Miami on a five-year, $118 million deal, league sources told Yahoo Sports.
"While I am disappointed by LeBron's decision to leave Miami, no one can fault another person for wanting to return home," Heat president Pat Riley said in a statement. "The last four years have been an incredible run for South Florida, HEAT fans, our organization and for all of the players who were a part of it. LeBron is a fantastic leader, athlete, teammate and person, and we are all sorry to see him go."
After James' announcement, the Houston Rockets reached agreement to trade Jeremy Lin, a 2015 first-round draft pick and other draft considerations to the Los Angeles Lakers to clear most of the salary-cap space needed to sign Bosh to a four-year, $88 million contract, league sources said. But Bosh is staying with the Heat.
"I went to Miami because of D-Wade and CB," James wrote in his essay. "We made sacrifices to keep [Udonis Haslem]. I loved becoming a big bro to [Mario Chalmers]. I believed we could do something magical if we came together. And that’s exactly what we did! The hardest thing to leave is what I built with those guys. I’ve talked to some of them and will talk to others. Nothing will ever change what we accomplished. We are brothers for life."
James now returns home, hoping to finish what he started when the Cavaliers made him the top pick in the 2003 NBA draft.
"When I left Cleveland, I was on a mission," James wrote. "I was seeking championships, and we won two. But Miami already knew that feeling. Our city hasn’t had that feeling in a long, long, long time. My goal is still to win as many titles as possible, no question. But what’s most important for me is bringing one trophy back to Northeast Ohio."