“Lloyd is a great lad and we are all glad to see him back at the club for both personality and footballing reasons,” Heckingbottom told the club’s official website.
“Once we knew there was a possibility of this deal happening, it was a no-brainer.
“Lloyd expressed his desire to come back here and has turned down other good offers across the Championship, which shows his hunger to do well here and that’s exactly what we need.”
Isgrove made one first-team appearance for Southampton after progressing through their academy and has also had loan spells at Peterborough and Sheffield Wednesday.
He is Barnsley’s seventh summer signing following the arrivals of Stevie Mallan, Jason McCarthy, Liam Lindsay, Cameron McGeehan, Zeki Fryers and Ethan Pinnock.