Last season, the 24-year-old attacker was loaned to Latics for two months, from October to early December.
Due to a string of injuries for parent club Chesterfield, Drummond was called up early from his original contract, which was set to expire in the new year.
But when his contract with the Spireites ended this summer, he was released, and Latics manager Micky Mellon quickly signed the former Macclesfield player.
“Kane is a young player with real talent and potential,” said manager Mellon.
“He’s quick, direct and gives us something different in the wide areas.
“He’s a player I admire a lot, and I believe we can get the best out of him. He’s got a lot of raw potential.
“We’ve kept an eye on him for a while and believe he can grow with us. He’s hungry to kick on at this level and show what he’s about, and we’re delighted to bring him in as part of our plans moving forward
Drummond, who can play on either wing or in a central attacking role, made seven National League appearances for Oldham and three in FA Cup games against Halifax Town, Tranmere Rovers and Leyton Orient.
Of signing his deal at Boundary Park, he said: “I’m buzzing to be here. Oldham’s a massive club with big ambitions and I’m excited to be part of that.
“It felt like the ideal fit for me as soon as I talked to the management and learnt about the plans for the upcoming season.
“It was easy for me to return when the chance arose because I enjoyed my stay here.
“I want to show what I can do and help this team push on in League Two.”
After former loan star Tom Pett secured a permanent contract yesterday (Tuesday), Drummond is the second summer acquisition in as many days.
