The 28-year-old actress, who left her role as Jo Sugden in 2008, will appear in the new series of the BBC One drama as a 17-year-old student.
A source told the Daily Star Sunday: "There is always plenty of drama on Waterloo Road and Roxanne's character will be right in the middle of it. Roxanne is so popular with viewers so it's no wonder they've signed her up.
"There aren't many actresses who can play someone more than ten years younger than them. Most people who are nearly 30 have forgotten what school was like but Roxanne has gone back for a new term on one of TV's top shows."
Since leaving Emmerdale, Pallet has competed in Dancing On Ice - finishing in sixth place - and starred in Casualty.
Pallet started filming for Waterloo Road last week and will appear on screen later this year.
The show will relocate to Scotland in April of next year as part of the BBC's aim to produce more programming there.