The 30-year-old has joined on a free transfer after being released by Rotherham to become Town’s first signing following their promotion from Sky Bet League Two.
He spent the 2010-11 season on loan at Greenhous Meadow from Watford, making 52 appearances, and admitted he did not think twice about returning.
“It’s really good to be back,” Sadler told the club’s official site.
“I wasn’t thinking about it when I came over though, I just wanted to get the deal sorted.
“Jacko (assistant manager Mike Jackson) had kept in touch over the last couple of years and I had spoken to him a couple of times.
“We went to Shrewsbury a couple of weeks ago, in the town and were just walking around a couple of the shops.
“We love the town and know what the club means to the town.
“The only thing with that first time (I was here) was that we didn’t get promoted but we thoroughly deserved to.
“I for sure want a promotion with Shrewsbury and what better place to do it in League One up to the Championship.
“I’ve played a lot of games in this league and that is definitely one of the remits for the manager this summer – to bring in a few lads who have got experience of the division.”