The 24-year-old winger returns back to Santiago Bernabeu after signing a five year deal.
The winger came through the Madrid youth system but failed to break
into the first team under Carlo Ancelotti, before moving on to Espanyol
last season.
Espanyol were hoping to activate their option to purchase the
24-year-old's contract outright from Madrid, although Madrid held an
option to buy him back either this summer or next year.
Espanyol
president Joan Collet announced that the two sides had agreed a fee,
believed to be around €1 million, that would see the Spaniard return to
the capital, but the Catalan side are reportedly holding on to 25 per
cent of his rights.
Madrid announced that the player has returned to the club and signed a
five-year deal, become Rafael Benitez's first piece of business in
charge.
"Real Madrid has recovered the rights of Lucas Vazquez within the existing agreement with the Espanyol," a statement read.
"The player is tied to the club for the next five seasons."
During his solitary season at Espanyol, Vazquez scored three and set up a further six goals in 33 La Liga appearances.
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