26-year-old Misic returns to Croatia two-and-a-half years after leaving Rijeka for Sporting, with Dinamo having an option to buy him.
The two-time Croatian international struggled for game time after moving to Lisbon and was loaned to PAOK last season.
Following an impressive year in Greece, many expected PAOK to make Misic’s stay permanent.
However, he will spend the 2020-21 season back in his homeland with Dinamo.
Misic will not be eligible for Dinamo’s Europa League games having arrived after their squad was submitted.
One player who will not be joining Misic in Zagreb is young winger Rafael Camacho.
Dinamo were in advanced talks to take Camacho on loan from Sporting, but that deal fell through.
Lokomotiv Moscow were also keen on the former Liverpool talent, but could not strike a deal.
As a result, Camacho will remain with Sporting until at least January when the winter transfer window opens.