The 26-year-old Shenton, who began his career with the Tigers before moving to St Helens two years ago, is one of seven new signings made by coach Ian Millward for Super League XVIII and takes over the captaincy from the retired Danny Orr.
"I have been very impressed with Michael's attitude and willingness to contribute in training so far," said Millward. "As a former England international he has made a big statement returning to Castleford and I believe he will be a great captain for us."
Shenton has been given his old number three jersey, while Australian utility back Justin Carney will wear two and Jamie Ellis gets Orr's old number seven shirt.
Jake Webster, Jordan Tansey, Lee Gilmour and Weller Hauraki are Castleford's other recruits but Millward is still on the look-out for more fresh blood.
"The players have been training well but there's no hiding from the fact that we ideally need extra depth," he said.
"We are on the look-out for new additions but this is subject to club finances being available to enable us to recruit further."