Dorsey revealed the news in a post Tuesday on his personal blog, but said the transition has essentially been in effect all year. He cast his earlier return, made at the behest of Twitter CEO Dick Costolo, as a move that was always intended to be temporary.
"In Spring of 2011, Dick asked me to take an operational role overseeing product, design, and brand," Dorsey wrote. "Our shared goal was to get those organizations back under him as soon as possible, simply because it was the right thing to do for the company. We moved all of my reports back under him in January of this year after leadership was firmly in place."
Dorsey had been splitting his time between two of the fastest-growing companies in Silicon Valley. He is also the founder and CEO of mobile payments venture Square, which recently nabbed a high-profile deal with Starbucks and now handles an annual payment volume of around $6 billion.
Dorsey said he is currently spending the majority of his time at Square.
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Twitter's co-founder -- ousted from the company in 2008 during a power struggle with fellow co-founder Evan Williams -- had a big hand in a major redesign Twitter unleashed in Dec. 2011. The overhaul revamped the site's design and iconography with an eye toward making it more unified and more initutive for new users.
"Twitter should be usable by those who know the shortcuts and those who don't," Dorsey said at the time, during a press event where he appeared side by side with Costolo.
Dorsey says he scaled back his role soon after that redesign launched. He may have been pushed: A recent New York Times profile of Costolo, who became Twitter's CEO in late 2010, says that Dorsey's role was reduced "after employees complained that he was difficult to work with and repeatedly changed his mind about product directions."
Twitter's management has been a game of musical chairs over the years, with co-founders entering and exiting throughout, but it appears to have stabilized under Costolo's leadership. Co-founders Evan Williams and Biz Stone formally left the company last year to focus on new ventures through their incubator company, Obvious Corporation.
Like Williams, Dorsey remains a member of Twitter's board -- and he's apparently still dropping by the office regularly. As he wrote in his blog: "I'm back to going to Twitter on Tuesday afternoons."