Ilkay Gündogan has rejoined Manchester City after his contract at Barcelona was terminated by mutual agreement.

Gündogan has signed a one-year deal with City, with an option to extend the contract by a further 12 months.

The German midfielder, who announced his international retirement on Monday, was deemed surplus to requirements by Barça after they signed Dani Olmo from RB Leipzig.

Barca's precarious financial position meant that they needed to free up space on their wage bill in order to register Olmo to play in LaLiga, and Gündogan's exit creates some much-needed headroom.

City have paid no fee for Gündogan's services, and sources told ESPN that the remainder of the wages he was due from his Barça contract have been written off.

"After just one year it's already time to say goodbye. I came here to face a new, exciting challenge, and I was ready for it. I have given everything to fight for the team and the club the best possible way in a difficult season and I was looking forward to helping my teammates in the new campaign," Gündogan said in a message posted to X before City announced his return.

"Now I am leaving in a difficult situation, but if my departure can help the club financially, it makes me a bit less sad.

"Nevertheless, it's been a time with incredible experiences and ups and downs -- I always wanted to play at Barça, and I am very grateful for a memory and experience that I will remember for my life."

Gündogan won 12 major trophies, including five Premier League titles and one Champions League, during his first spell at City. He left the club following the expiry of his contract last summer having made more than 300 appearances across seven years at the club.

"My seven years at Manchester City were a time of pure contentment for me, both on and off the pitch," Gündogan said in a statement.

"I grew as a person and a player, developed a special relationship with the City fans and enjoyed amazing success. It was an exceptional period in my life.

"To have the opportunity to return here means so much.

"Everyone knows the respect I have for Pep -- he is the best manager in the world and working with him every day makes you a better player. You feel constantly challenged, which for any professional is exactly what you want. I cannot wait to work with him again ... Honestly, I cannot wait to wear the City shirt again."