The star has agreed terms with ITV bosses who have now drawn up a draft statement confirming her reappointment.
She will replace Tulisa on the panel, whose management have already been informed she is not “foremost in their minds” for a return.
A source said: “Sharon and TV bosses feel there is very much unfinished business following her first stint on the show – and are delighted that she has agreed to return.
“It was never about the money for Sharon. She genuinely loves the programme and considers her previous time on the panel as being a very fulfilling time in her life.
“Despite her ups and downs with Simon Cowell over the years, she has always remained a part of the family and the pair of them currently enjoy a really close friendship.”
Sharon’s return to the show is a massive boost for the star after her marriage to Black Sabbath rocker Ozzy, 64, hit the buffers after he went back on drink and drugs.
Bosses had initially feared Sharon might pull out of the deal. But the star has pledged her commitment to th series which Cowell hopes will be “revitalised” by her return.
When Sharon went head to head with Danni Minogue on the X Factor in 2007 it pulled in over 12 million viewers.
Viewers were captivated by the on-screen fireworks with Sharon not afraid to speak her mind.
In Tom Bower’s infamous biography of Cowell, the mogul laid bare the friction between Dannii and Sharon – which made for great TV.
He said: “Dannii and Sharon Osbourne are at loggerheads. When I sit next to one, the other sulks. I have to try to give each one equal attention.”
In 2007, the Mirror revealed how Cowell read the riot act to his fellow judges after growing tired of them squabbling with each other .
Sharon and Dannii were given a tonguelashing during a tense two-hour meeting behind closed doors with the TV mogul.
After summoning them to the meeting he told them bluntly: “Stop fighting. Stop flouncing... and stop getting on my nerves.”
A source said: “Simon knows that Sharon ruffles a fair few feathers – and he hopes deep down that she will do the same on this year’s panel.
Tulisa appealed to the younger X Factor fans but they could do with winning back some of the more mature viewers – and Sharon fits that demographic perfectly.
“It’s exciting times, Cowell is over the moon that she’s signing up. He thinks she will be a revelation second time around.”
Nicole Scherzinger, 34, Gary Barlow, 42, and Louis Walsh, 61, are all expected to be confirmed to return too. Nicole has previously spoken of her delight at the prospect of Sharon re-joining the panel.
She said: “Sharon is the first woman who introduced me to The X Factor and brought me on as a guest judge, so I’m Team Sharon all the way.
“She’s a righteous mama. I love and adore her.”
Last night an X Factor source said: “While a contract has not been signed, a deal has been agreed with Sharon.”
It's about time Sharon!! Now get rid of Gary please.