The team, meanwhile, will switch from Chevrolet to Honda.
The manufacturer change to Honda announced before Saturday night's season finale at Auto Club Speedway had been expected after rival Chip Ganassi said two weeks ago he was moving to Chevrolet.
The re-signing of Hinchcliffe went down to the wire. Not only did Andretti need a new primary sponsor to replace GoDaddy, but Hinchcliffe had been in discussions with Ganassi on a multi-series program. Hinchcliffe's hope had been that the Ganassi deal would eventually lead him to the team's No. 10 car currently driven by Dario Franchitti.
But without sponsorship needed to fund the Ganassi program, Hinchcliffe's smart play was a return to Andretti, where he's become a breakout star for the series.
"The last two years have been tremendous and we've spoken so much about the chemistry and the team, and being able to keep the band together is huge," Hinchcliffe said.
The Canadian was hired by Andretti following Dan Wheldon's death in a crash in the 2011 season finale. Wheldon had been scheduled to replace Danica Patrick in the Andretti ride, and team owner Michael Andretti then turned to Hinchcliffe, who was looking for a ride following the unexpected closure of Newman-Haas Racing.
Instantly popular among fans off the track, Hinchcliffe clicked immediately with new teammates Marco Andretti and Ryan Hunter-Reay.
But the indecision of sponsor GoDaddy made Hinchcliffe's future at Andretti uncertain.
Instead, Michael Andretti grabbed United Fiber & Data for the No. 27 car. The tech company, which was founded by three members of the multi-platinum rock band LIVE and their Think Loud Development company, will also be an associate sponsor for Marco Andretti and Hunter-Reay, and the primary sponsor for Pro Mazda Champion Matthew Brabham as he moves to Indy Lights next season for Andretti.
UFD director Bill Hynes said Hinchcliffe will be an outstanding spokesman for its tech company.
"We saw how great James was with his prior sponsor, how great he was as a brand ambassador, and we almost want to piggyback to that," said Hynes. "We just really love the IndyCar product, we really think it's great platform for us and we really think the face for UFD should be (Hinchcliffe)."
The move to Honda was expected following Ganassi's decision to join Roger Penske in the Chevrolet ranks. It put the top three IndyCar organizations with the same manufacturer, and a switch to Honda made sense for Andretti. It means he'll be the top team and not fighting with two others for attention or resources.
"It's like being back home," Andretti said. "I have no doubt that together we will see great success."
Andretti won three series championships with Honda in 2004, 2005 and 2007, and the Indianapolis 500 in 2005 and 2007. Of Andretti Autosport's 48 IndyCar wins, 39 were with Honda.
"As many of you will remember, the Andretti organization played a major role in Honda's success during the previous era of manufacturer competition in Indy car racing, and we're looking forward to adding more victories and championships to an already impressive total," said Art St. Cyr, President, Honda Performance Development.
In its two seasons with Chevrolet, Andretti won the championship last season with Hunter-Reay and nine races.
"We would like to thank the Andretti Autosport drivers for their on-track achievements that contributed to Chevrolet clinching the 2012 manufacturers' championship," said Jim Campbell, U.S. Vice President Performance Vehicles and Motorsports. "They are all true professionals on and off the track. We wish them well and look forward to spirited competition in the future."