— Granada CF ❤️⚪️ (@GranadaCdeF) August 18, 2020
Vallejo, 23, joined Granada on a temporary deal from Madrid in January after a loan spell at Wolves was cut short.
He made 14 appearances for the Andalusian club, amassing 881 minutes of game time.
Madrid were reportedly planning to sell Vallejo with a buy-back clause, but he will go out on loan again.
The former Spain under-21 international joined Madrid from Real Zaragoza for €6m in 2015.
He has appeared 19 times for Los Blancos but most of his time has been spent out on loan.