Thousands of cheering supporters gathered outside Phnom Penh's airport and lined the road to the city centre to welcome Sam Rainsy, waving flags and shouting "change change!"
"I'm very happy and excited to see the leader of democracy returning to the country," said Sok Kan, 64, who was among those waiting to greet him.
The French-educated former banker fled in 2009 to avoid charges he contends were politically motivated.
Rainsy kissed the ground at the airport upon returning from France shortly after 9.00 am (0200 GMT) on a flight via Bangkok, and was due to later speak at Democracy Park.
More From This Section
"His presence will galvanise activists and voters."
The 64-year-old had faced 11 years in jail but was pardoned by King Sihamoni last week at Hun Sen's request, clearing the way for his return ahead of elections on July 28.
US lawmakers have called for the United States to cut off aid to Cambodia unless the polls are free and fair.
Rainsy told AFP last Friday that he was "very happy" to be able to return to Cambodia, adding that the pardon was "a small victory for democracy" but also warning that "much more remains to be done".
But he will hit the campaign trail soon after his return to try to boost support for his party.
Sovann said the CNRP would discuss possible ways to register Rainsy as a candidate after his return.
The UN's special rapporteur on human rights in Cambodia, Surya Subedi, on Monday urged Cambodia to let Rainsy play a "full part" in politics.
Rainsy left his homeland and moved to Paris aged 16 after the disappearance of his father, which historians blame on agents contracted to then-dictator Lon Nol.
He fled in 2005 after Hun Sen pressed defamation charges against him but received a royal pardon the following year and returned to the kingdom. He left Cambodia once again in 2009 and was convicted in his absence for charges including inciting racial discrimination and disinformation.