Damian Green has been appointed First Secretary of State and Minister for the Cabinet Office in the reshuffle, a significant promotion.
Gove, who was sacked by May previous year, was the biggest mover in a reshuffle of some of May's top team, as the Prime Minister looks to shore up her authority over the Conservatives following last week's election which saw the party lose its majority.
The shock vote saw May lose her overall majority and she has been forced to turn to Northern Ireland's Democratic Unionist Party to govern.
Less than a year after sacking him, the Prime Minister said that Mr Gove would be the new Environment Secretary as she carried out a limited reshuffle of her top team.
Gavin Williamson remains Chief Whip while Chris Grayling kept his job as Transport Secretary.
May demoted Liz Truss from head of the justice ministry to chief secretary to the Treasury, a non-cabinet post equivalent to junior finance minister.
Current Education Secretary, Justine Greening, has also entered Number 10.
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Long-time friend Damian Green was made First Secretary of State and Minister for the Cabinet Office, as the delayed Cabinet reshuffle got underway, Independent reported.
Michael Gove replaces Andrea Leadsom, who has shifted sideways to become leader of the House of Commons.
Aside from Gove's appointment it appears unlikely that there will be further upheaval at the Department for the Environment, with Resources Minister Therese Coffey now in Italy for a G7 meeting on the Paris Agreement and George Eustice set to retain his role as Parliamentary Under Secretary of state for Farming, Food and the Marine Environment.
The Cabinet reshuffle, which saw relatively few changes to the front bench, will largely have been created to shore-up support within May's own ranks after initial calls for her resignation were muted within the party.
David Gauke, who previously served as the United Kingdom chief secretary to the Treasury, has been promoted to serve as secretary of state for work and pensions in the new cabinet, the Downing Street said in a statement.
Further ministerial appointments within Defra have yet to be confirmed, and it is not known whether Thérèse Coffey, the junior minister with direct responsibility for the air quality portfolio within the Department prior to the election, will retain her post.
David Lidington, the leader of the Commons, also received a step up as the new Lord Chancellor and Justice Secretary.
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