O'Brien began the season on trial at Colls and scored a goal in a pre-season fixture with Al-Ittihad.
Despite the trial period, the 23-year-old joined Hyde United for the start of the campaign but will now return to Skuna Stadium.
“Danny did some of pre-season with us and at the time it was a toss-up between us and Hyde United. He chose Hyde at that point and for one reason or another it hasn’t worked out there," said Atherton manager Michael Clegg.
"Danny’s a local lad and has loads of ability, we have a great relationship and I’m hoping we can bring the best out of him. He needs to find a home now, score some goals and get his name back out there because he is a top player and an asset to any side at this level."
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