Peter Cash, 57, the head of English at Newcastle under Lyme school, became a cause cel bre for unions campaigning for employment rights in private schools when he was dismissed on the last school day before Christmas.
He is believed to have been the first teacher to be sacked over test scores, as the chairman of governors publicly cited poor results in the English department.
Mr Cash has won a confidential settlement from the school after 50 staff went on strike and parents and pupils complained.
He is to return to his old job on Monday.
Mr Cash said he was happy to put a "dark period" of the past five months behind him and return to the school, where he had taught English, directed 18 drama productions and coached the cricket team for the past 22 years.
The headteacher who dismissed Mr Cash retired the same day, before Christmas, and the school has appointed a new principal, Nick Rugg.
Mr Cash attended a tearful welcome back party on Saturday. He said: "Until recently, Newcastle under Lyme school had been a very happy place to work.
Knowing the teaching staff and the pupils as I do, I'm sure that under the new principal, Mr Rugg, it can quickly become so again."
He expressed gratitude to the 150 staff, pupils and parents who had actively campaigned for his reinstatement over the past five months.
"They have invested so much emotional and moral energy into this issue that I hardly know how to thank them," he said.
Although the English department's valued-added results were singled out for criticism, more than half of the pupils achieved an A grade in English language GCSE and nearly half were awarded an A in English literature.
The school has issued no public statement beyond confirming Mr Cash's reinstatement.