The legendary striker had been the subject of interest from clubs in Major League Soccer with Los Angeles FC, leading the race for his signature.
But the Uruguayan has followed his heart and opted for Nacional, a club he played for as a teenager before moving to Europe.
Suarez came through the youth ranks and made his professional debut at Nacional but will now return to the club after 16 successful years in European football.
Putting an end to a summer of speculation and rumours, Suarez himself announced the news in a video posted to his personal Twitter account.
In the short video, the former European Golden Boot winner revealed that he has reached a pre-agreement with Nacional and that he expects the details to be ironed out shortly.
The news will delight Nacional fans who had been campaigning for the signing.
The hashtag #SuarezANacional [Suarez to Nacional] had already been trending all week, thanks mainly to the club’s supporters desperate to see the national icon come home.
The 35-year-old recognised this support in his video message, thanking fans for their messages of love and support. Suarez says he and his family are very grateful.
The efforts from Nacional were not only online but in person too, with club president Jose Fuentes travelling to Madrid to meet personally with Suarez. According to Spanish news outlet MARCA, this meeting had gone positively.
Suarez first joined Nacional as a 14-year-old. After scoring 12 goals in 34 games in his first full season in the Nacional first team, he moved to Eredivisie side Groningen for 800,000 euros.