The actor has signed up for the part of Dodger Savage's biological father Patrick Blake, who will make his first appearance on screen in a few weeks' time.
While firm details of Patrick's first scenes have yet to be revealed, it's sure to be an emotional moment for Dodger as he comes face-to-face with his long-lost dad.
Dodger's world was rocked in the summer when he learned that wheeler-dealer Dirk (David Kennedy) is not his real father.
He initially kept his discovery to himself, but later lost his temper with Dirk for hiding the truth from him - and the pair's relationship has since been strained.
Sheffield had a short stint in Weatherfield last December and January as he took on the part of charmer Danny Stratton for Becky McDonald's departure storyline. He is also well-known for his role as Alex Adams on Holby City.
The actor commented: "I'm very happy to be joining Hollyoaks at a time when things are getting very exciting."
Earlier this year, Danny Mac - who plays Dodger - told Digital Spy that he was looking forward to the arrival of his character's real dad.
Mac said in August: "That's what's driving me through storylines at the moment. That's the place where it inevitably has to go, for better or for worse. He needs to find out who his father is and get some questions answered.
"It's such a life-changing time for Dodger, but it's nice that it hasn't been one big stunt or one big drama. Instead, it's just slowly fizzling through the other stories and building up. It's really good to have a prolonged storyline."
Hollyoaks airs weeknights at 6.30pm on Channel 4, with first look screenings at 7pm on E4.