Green, who spent time on loan with the Dons last season, has put pen-to-paper on a two-year deal which will see him remain atstadiummkuntil June 2016.
The 25-year-old left Charlton Athletic earlier this month despite having made 19 appearances for the Championship side last season.
Green attracted interest from a host of clubs during his time as a free agent before, ultimately, opting for a permanent switch to Milton Keynes.
“I’m delighted to be here,” he told MK Dons Player. “When I knew I wasn’t being kept on at Charlton, MK Dons were the Club I wanted to come to. Luckily the Club wanted me too so everyone’s happy!
“There was a bit of interest but MK Dons stood out because of the way the team plays football, the manager, who is great, the players, who I know from my spell last year, and the stadium. I can’t wait to get started.”
Dons boss Karl Robinson told mkdons.com: “Danny showed during his time with us last season what a quality player he is, with his delivery, guile, work-rate and set-pieces, plus he’s got a long throw.
“It was very evident the impact he'd had on the team when he went back to Charlton and we’re delighted he’s here again.
“As soon as we knew he was available, we moved quickly to get the deal done. He gives us another exciting option out wide, to go along with Powelly and Bowds, and we saw last year how important it is to have depth in that position.”
Hear from and learn more about the new signing via the links below:
Green glad to be back
In focus: Danny Green
Gallery: Danny Green