More than 2000 shouting supporters met Sam Rainsy as he arrived at Phnom Penh airport on Friday.
Rainsy, whose political party carries his name, said: "I am so glad to return home to see all of you. Thank you for coming to see me."
The former finance minister fled to France, where he was educated and brought up, last year after his parliamentary immunity was revoked.
He was then sentenced in absentia to 18 months in prison for criminal defamation of the prime minister, Hun Sen and his junior coalition partner, Prince Norodom Ranariddh, a former political ally of Rainsy.
His return followed a royal pardon requested by Hun Sen after Cambodia's three main political leaders agreed last week to end their bitter personal and political feuds.
There were widespread doubts about how long the reconciliation would last in a country with a history of fractious politics, but Sam Rainsy said the slate had been cleared.
"We have ended all our disputes. What is most important is to build our nation together so that Cambodian children will have a better future," he said.
"Our political leaders should talk rather than confront each other"
Thun Saray, Cambodian Human Rights Action Committee
Rainsy has said his party will drop its confrontational tactics and move towards dialogue with Hun Sen's ruling Cambodian People's Party, but denied he has abandoned his opposition to the government in return for being allowed home.
"I did not run away. I had to reorganise the party, the forces both inside and outside of the country," he said.
Hun Sen said on Friday the opposition played an important role in Cambodia's fledgling democracy.
"We should not be afraid of the opposition party and civil society. We need them to tell us what the government has done wrong so we can correct our acts," he said during an official meeting broadcast on state television.
Thun Saray, chair of the Cambodian Human Rights Action Committee, also stressed the importance of the opposition party continuing its role.
Good to talk
But he said the truce between Hun Sen and Sam Rainsy signalled a new level of maturity among Cambodian political leaders. "Our political leaders should talk rather than confront each other," he said.
Hun Sen has adopted a more
reconciliatory attitude of late
Hun Sen, a former Khmer Rouge soldier who has run Cambodia for 20 years, had come under fire from Western governments, particularly the US, for his increasingly authoritarian rule.
Analysts say his recent policy of apparent reconciliation is aimed at rebuilding international support for his government ahead of a key donor meeting next month.After decades of civil war and the Khmer Rouge genocide which killed 1.7 million people in the 1970s, impoverished Cambodia relies on $600 million in annual foreign aid, much of it from the United States and other Western donors.