The much-decorated forward, who once played on a line with "The Great One", Wayne Gretzky, has plumped for Capitals for the sake of his family. Hand, who celebrates his 36th birthday next month, had offers from clubs throughout Britain after parting company with Dundee Texol Stars who he led to the British National League and play-off titles in his first season.
The homecoming has been made possible by sponsorship from two Edinburgh-based companies - Capital Car Hire and Thomsons Television Services.
And grateful Hand revealed today: "Although I’ve spent eight years at other clubs, I always wanted to return to Edinburgh.
"Scott Neil has done a great job in rebuilding Capitals and he is recruiting a highly-competitive squad for this season.
"I certainly had offers to join other clubs after leaving Dundee, but this decision was important for my family."
The star signing was announced at TurboVenture, an American-style motion simulator, in Edinburgh’s Fountain Park leisure complex.
Hand added: "I want to be part of a club for the long-term and I am keen to allow my young family to grow up in Edinburgh close to their relatives and friends.
"I’m grateful to Scott for giving me this opportunity. Edinburgh is and always will be my home. I grew up here and I’m genuinely pleased to be home.
"Even when I was player-coach in Dundee, I stayed in the Capital and I’m confident that we can continue to build a reputation for this club in the city.
"On a personal note, I’d like to thank Thomsons Television Services and Capital Car Hire for their support."
Hand will make his home return on Sunday, September 7, at Murrayfield against the club’s ambitious arch rivals, Fife Flyers, and he said: "They could not have scripted it better."
The player, who was brought up in Edinburgh’s run-down Pennywell area, has made more than 50 appearances for the national team in a glittering career.
Hand has scored 1399 goals and recorded 2169 assists for a career points total of 3568 and the first British-developed player to be drafted by an NHL team when he joined Canadian giants Edmonton Oilers.
His senior career began aged 13 when former coach Alex Dampier gave him his debut for now defunct Murrayfield Racers when six members of the squad were on Great Britain duty at the World Championships in China.
Hand played for various teams out of Murrayfield for 13 seasons before moving to Sheffield Steelers and after a four-year spell, he was transferred to Ayr Scottish Eagles.
The inspirational player then led newly-formed Dundee Texol Stars to success and Capitals’ director Scott Neil, the player’s cousin, said: "This is a massive signing for us as Tony is synonymous with Edinburgh ice hockey.
"We are bringing back a major talent with huge experience and we’ve also recruited one of the leading forwards in the UK game." He added: "Tony’s name will assist us in further promoting Edinburgh Capitals, however, we could not have brought Tony back to Edinburgh without the financial support of our sponsors."