Reynolds' future has long been at the centre of speculation, ever since a falling out with Erebus Motorsport CEO Barry Ryan became apparent.
Reynolds' future is now set in stone by way of a return to both the Kelly squad and the Ford brand itself.
The Albury-born larrikin spent one season at the Kellys in 2011 before controversially departing to take up an opportunity with Tickford, or Ford Performance Racing as it was then known.
“I'm unbelievably happy to be joining Kelly Grove Racing for the 2021 season and beyond,” said Reynolds, whose relationship with Alistair McVean as race engineer will continue.
“It's obviously a very exciting time for the team with the recent investment from the Grove Group and I believe the team has the resources and firepower to achieve great things this year and continue building on some of the success we saw last year.
“I think we're on the cusp of something really awesome at Kelly Grove Racing, the infrastructure and culture that's in place has already really impressed me and I'm excited for the 2021 season.
“I'm also looking forward to working with André as his team-mate, we'll definitely push each other and hopefully get the two Mustangs up the pointy end.”
“It's fantastic to have Dave joining the team, he's a driver with a lot of experience under his belt and who's had a lot of success during his career in Supercars so far,” said Todd Kelly.
“I believe that with the direction the team is heading in and our ambitions for the future, Dave will be an extremely strong asset who will have the ability to achieve strong results immediately and also complement André and help him to continue his development path.
“I think with the driver line-up we've landed with, both drivers will push each other to succeed, as was the case with Rick and André last season, which is exactly what we were after when deciding on what direction to go in.”
Reynolds has seven Supercars race wins to his name, the last of which came at the 2018 finale at Newcastle.