The move came after James Cleverly was appointed Home Secretary earlier today, to replace Suella Braverman who was sacked by the PM.
The last time a former Prime Minister came back to the Cabinet was Alec Douglas Home, who returned to the Cabinet as Foreign Secretary in 1970.
WATCH: David Cameron walks into Downing Street ahead of the reshuffle
In a statement, Cameron said: “I may have disagreed with some individual decisions” made by Rishi Sunak, but added that he “is a strong and capable Prime Minister, who is showing exemplary leadership at a difficult time”.
He said: "The Prime Minister has asked me to serve as his Foreign Secretary and I have gladly accepted.
"We are facing a daunting set of international challenges, including the war in Ukraine and the crisis in the Middle East.
"At this time of profound global change, it has rarely been more important for this country to stand by our allies, strengthen our partnerships and make sure our voice is heard.
"While I have been out of front-line politics for the last seven years, I hope that my experience – as Conservative Leader for eleven years and Prime Minister for six – will assist me in helping the Prime Minister to meet these vital challenges."
Sunak began his reshuffle this morning by sacking his Home Secretary Suella Braverman and replacing her with Cleverly.
This comes just days after the Home Secretary published an unauthorised Op-Ed, accusing the Met Police of 'playing favourites' when it comes to policing protests.
A No10 source told GB News that Rishi Sunak "wants a united team to deliver the changes this country needs for the long term."
But a source on the right wing of the Conservative Party warned that Cameron's appointment is "utterly bonkers".
Reacting to the news, the insider said: "It just shows the lack of strategy - why have we campaigned for change as our main theme and then brought back Cameron?"
They added: "But that just sums up no10... it’s run by kids".
But fellow former Prime Minister Theresa May congratulated Cameron, adding: "His immense experience on the international stage will be invaluable at this time of great uncertainty in our world. Looking forward to working together again".
Meanwhile, Tory MP Craig Whittaker, who served as Deputy Chief Whip under Liz Truss, described the appointment of Cameron as a "stroke of genius".
Speaking to GB News, he added: "James [Cleverly] is a great move and a no nonsense guy.”
Schools minister Nick Gibb was the second to go in today's reshuffle, after Braverman, announcing on X that he had asked the Prime Minister to step down from his role so he can prepare to take a diplomatic role after the general election.
He said he remains "an enthusiastic supporter of the Prime Minister's leadership".
While many moderates in the party were demanding Braverman be sacked over her unauthorised Op-Ed, she is said to have the backing of as many as 52 Conservative MPs, many of whom come from the New Conservatives Group of MPs and the Common Sense group.
A source on the right wing of the party told GB News that the Conservative Party is "in disarray", warning that Sunak is facing threats from MPs who are of the view that it is "every man for himself" ahead of the next election.
Reacting to this morning's resignation, Conservative MP Andrea Jenkyns tweeted: "I support @SuellaBraverman Sacked for speaking the truth."
She added: "Bad call by Rishi caving in to the left".
A former minister told GB News that Sunak's decision to sack her is "surprising" noting that the former Home Secretary has "a lot of support" in the party.