O'Grady, 27, spent the final four months of the campaign on loan at Oakwell and made the move permanent on Wednesday, penning a two-year deal for a fee thought to be in the region of £300,000.
The frontman, who previously worked with boss David Flitcroft at Rochdale, made a huge impact as the Reds staged a remarkable escape from Championship relegation last term, scoring six goals in 16 appearances.
He became a focal point of the Reds' attack and he is looking for more of the same next season.
"It's been a bit of a journey from the end of last season to get to this point, but I am delighted to have signed and I'm looking forward to pre-season training," he told the club's official website.
"I'm looking to continue where I left off last season and get goals. I'll set some short-term targets, attain them and then set some more.
"Last season I was determined to give everything from the first minute and happily the fans here took to me and that spurred me on to do well for them.
"We know what we can do if we perform and if we can repeat our form of 2013 then we can achieve what we want to."
- Sports & Recreation
- David Flitcroft