The 32-year-old, who spent the second half of last season on loan at the Greek Super League club and scored three times in eight matches, had signed a one-year contract, the team said in a statement.
Figueroa, who has also had spells in England, Spain and Italy, was capped 15 times for Argentina, and won a gold medal with the national team at the 2004 Athens Olympics.
Panathinaikos lie 10th in the start to the new season, collecting four points from their opening three matches which has left them 10th in the table.
- Sports & Recreation
- Greek Super League