Browne has signed a two-and-a-half-year deal, with the possibility of a further 12 months with the U's.
The ex-West Ham player, who had also been linked with Sheffield United and Charlton Athletic, was among several fringe players told by Boro manager Chris Wilder earlier this month that they were available for transfer in the January transfer window.
Uche Ikpeazu and James Lea-Siliki were also told they could depart. Millwall and Cardiff City are among those keen on Ikpeazu ahead of Monday's transfer deadline, while loanee Lea-Siliki could also leave Teesside following positive talks with parent club Rennes.
On the incoming front, Boro have been linked with moves for Newcastle United duo Jeff Hendrick and Ciaran Clark.
Browne is fit again following an ACL injury suffered last January and is need of game time.
The Londoner saw a move to Charlton fall through, but Oxford maintained their interest in bringing back the 24-year-old for a third spell - after two successful previous loan stints with the Us.
Browne has netted twice in 22 games in all competitions for the Teessiders after joining in the summer of 2019.
On his exit, he said: “It’s been a tough 12 months, but I’d like to thank the staff at Middlesbrough for all their support and hard work, and also say a big thank you to the fans, who have been brilliant with me the whole time.
"The supporters and the people around me kept me going through some very tough times, and they’re the reason that I’m able to look to the future now and be positive about what’s ahead.
“I’m looking forward to joining Oxford and getting back out there again and contributing. I’ve had some good times at the club on loan before and I can’t wait to get started again."
On the incoming front, Boro have brought in Flo Balogun, Aaron Connolly, Riley McGree and Caolan Boyd-Munce so far this month, while extending Neil Taylor's deal with the club for the rest of the season.
Wilder is keen on more incoming business before the window closes.
Outgoing business has seen Djed Spence remain on loan at Nottingham Forest for the rest of the season, with Boro electing not to exercise a recall clause. Onel Hernandez returned to parent club Norwich City and was immediately loaned out to Birmingham City.
Young players Isaac Fletcher, Sam Folarin and Calum Kavanagh have headed out on loan to Hartlepool United, Queen of the South and Harrogate Town respectively.
Goalkeeper Dejan Stojanović has joined German outfit FC Ingolstadt on loan for the rest of the season, while Williams Kokolo has signed for Burton Albion on a permanent basis.