Siddle, the 38-year-old Australian fast bowler, will be available from the start of the LV= Insurance County Championship season in early April through to the end of July. During that time he will also be available for Somerset's Vitality Blast campaign.
Last year, Siddle claimed 27 first-class wickets for Somerset at an average 23.92 with a best of 6 for 51 against Surrey. He also impressed with the white ball, taking 17 wickets in the Blast at an average of 17.88, including a best of 3 for 10.
A vastly experienced former Australian international who claimed 221 wickets in 67 Tests, Siddle also played a mentoring role to Somerset's young bowlers last season.
"I loved my time at Somerset last summer and when the opportunity to go back came about there was never any doubt that I would take it," Siddle said. "It's a great club with great people and the members and supporters are outstanding.
"I was made to feel like a part of the family as soon as I arrived and I'm looking forward to joining up with the boys again in a few months' time. Hopefully, I can contribute to Somerset having a big summer in 2023."
Andy Hurry, Somerset's director of cricket, described Siddle as "phenomenal for us on and off the field last year".
"His contributions on the pitch and in the dressing room were of the very highest order," Hurry added. "He is a proven winner who will contribute significantly on the field, and with his vast experience will also play a huge role in the development of our aspiring bowlers.
"During his time with us previously, he established an excellent rapport with his team-mates, the coaches, our staff and our members. He will be a valuable addition to our squad this summer and we look forward to welcoming him back to do what he does best in a Somerset shirt in 2023."
Somerset became Siddle's fourth county team when he joined them as an all-format overseas player last year following previous spells with Nottinghamshire, Lancashire and Essex.
Vilas, the 37-year-old South African who joined the club in 2017, will continue to play as one of Lancashire's overseas players for 2023.
"After taking some time out during the winter and having conversations with senior management at the Club, I have decided to stand down as captain of Lancashire Cricket," Vilas said. "It has been an honour and a privilege to lead this great county for the past four seasons, but I feel that the time is now right to step back from the role and allow Keaton to build on the superb job which he started during last season's One-Day Cup."