Sanderson is no stranger to Oxford City fans; the Striker was on loan at the RAW Charging Stadium last season and he played a key role in securing promotion.
Manager Ross Jenkins said: "We're delighted to get Olly on board.
"He's got great character and a great attitude which is very important.
"Olly brings a lot of qualities for to the table, so I'm looking forward to working with him this season."
Welcome back to Oxford City, Olly!