Nieto, 27, tallied eight goals, 21 points and a career-high plus-seven ranking in 70 games with the Colorado Avalanche during the 2019-20 season. He was one of only two Avalanche players to play in all 70 games last season, and added one goal and three points in 14 playoff games.
"Matt's a player we're obviously familiar with having been here for our Stanley Cup Final run in 2016 and he plays with speed and energy," Sharks general manager Doug Wilson in a statement. "His quickness and defensive responsibility made him one of the top penalty killers on Colorado and we feel that those assets, along with his decision making and playmaking, will bring a lot of elements to our team. We're excited to have Matt back in San Jose."
Nieto has played in 472 career NHL games split between the Avalanche and the Sharks, registering 62 goals, 151 points and 82 penalty minutes. The Long Beach, Calif., native was selected by the Sharks in the second round of the 2011 NHL Draft, 47th overall.