The 27-year-old, who came through City's academy, left for Reading in 2006 after making 15 appearances.
Golbourne, who joined Wolves in August 2013 and played 92 times for Wanderers, would have been out of contract at Molineux at the end of the season.
"Scott is a Bristol lad and that's important to us," said interim manager John Pemberton.
"He has been here before, he's athletic and someone we need for this football club."
The left-back joins new loan signings Lee Tomlin, Alex Pearce and Ben Gladwin at Ashton Gate.
Colchester United manager Kevin Keen has also confirmed to BBC Essex that the League One club have rejected another offer for midfielder Alex Gilbey from City.
Last week Keen said the U's received a "joke bid" for the 21-year-old.
Meanwhile, right-back Luke Ayling is expected to be sidelined for up to six weeks after undergoing surgery on his cartilage.
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Bristol City have re-signed former defender Scott Golbourne from Wolves on a two-and-a-half year deal.