Godfrey joined La Dea a year ago from Everton before spending the second-half of last season on-loan with Ipswich Town in the Premier League.
He has now dropped into the Championship with the Blades in a straight loan for this new season.
Godfrey told the club's website: "I'm a Yorkshire lad so brilliant to be back home and I'm looking forward to getting started. It was a good experience moving out to Italy.
"There were things I learnt about football, lifestyle and language but there's nothing like being in your home country and especially for the family being close to home, so really looking forward to it.
"The manager has some good ideas, and I am looking forward to learning under him and I think there will be positives through the season that we can really look forward to. I've been training hard at Atalanta, so it's been good to get that into the legs, plenty of minutes and plenty of tough training sessions as well, so I am feeling ready to go."