Williams, who was hired by the St. Louis Rams before the 2012 NFL season but missed it due to the ban and was subsequently fired, will be introduced as the Titans senior assistant/defence at a news conference later on Thursday.
The Titans said National Football League (NFL) Commissioner Roger Goodell notified Williams and the Titans that the coach's contract had been approved.
"The commissioner cited several reasons for the reinstatement, including Williams' forthcoming acknowledgement of and acceptance of responsibility for his role in the bounty program at the Saints, his commitment to never again be involved in a pay-for-performance or bounty system, and his pledge to teach safe play and respect for the rules at all levels of the game," the Titans said in a statement.
"The commissioner emphasized that Williams must fully conform to league rules and will be subject to periodic monitoring to confirm his compliance."
Williams was banned last March after an NFL investigation determined he had a leadership role in the Saints bounty scandal, a program that gave players cash rewards for knocking opponents out of games from 2009-2011.
On a recording that surfaced shortly after his ban, Williams could be heard instructing players to injure members of an opposing team ahead of a playoff game last year.
Williams, who was named defensive coordinator for the Rams before news of the bounty system surfaced in March, did not appeal his ban.
His credentials in 12 seasons as a defensive coordinator are impressive as his defences have ranked in the top 10 for points (four times), overall yards allowed (four times), rushing yards allowed (six times), third down defence (five times) and red zone defence (seven times).
For Williams, the contract marks his second stint with the Titans, having previously worked for the team from 1990-2000, including four years as defensive coordinator. In his final season with the Titans, the team ranked first in the league in defence and second in scoring defence.
He joins a Titans that finished last season with a 6-10 record and ranked last in the NFL in points allowed (29.4 per game) and 27th among the 32 teams in yardage allowed.
"I have known Gregg for over two decades and have seen him work his way up from a quality control coach to a head coach," Titans Head Coach Mike Munchak said in a statement.
"He will bring a great deal of defensive knowledge and energy to our staff. The decision to bring him here only came after going through a thoughtful and thorough process."
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