The Dungannon man, one of Ireland's most successful riders, replaces colourful Lincolnshire man Guy Martin in the Northern Ireland-based team.
Forty-year-old Farquhar first raced for the TAS-run outfit 10 years ago.
"This is really exciting and has given me a new lease of life. I am more motivated than I have ever been," said Farquhar, who has won three TT races.
"I am not jumping ship because I will still be running my Kawasaki team in the Supertwins.
"For Superstock, I will be riding a BMW with a new personal sponsor and on the back of that I have managed to get Guy Martin's Superbike ride at the TT.
"I am proud to be in this situation. It is by far the best package I have had at the start of a  season.
"I am up three mornings a week to go boxing training, trying to get myself in the best possible place I can be mentally and physically."
Farquhar will partner 11-time TT winner Ian Hutchinson in the Tyco BMW outfit for the Superbike and Senior TT events after Martin opted to sit out at least the opening half of the road racing season to participate in a mountain bike challenge in North America.
Previously a Kawasaki rider for many years, Farquhar has won two Supersport TT races and the inaugural Lightweight Supertwins class and last rode for Hector and Phillip Neill at TAS Racing back in 2006.
He boasts a record 200 successes on Irish roads, making him Ireland's most successful ever national road racer.
He will compete at the Mid Antrim 150 and Tandragee 100 races in April and race in the Supertwins class, alongside Jeremy McWilliams, Danny Webb and Canadian Darren James at the North West 200 in May.
Cameron Donald will join the team for the TT, riding McWilliams's supertwin in the Lightweight class.

He also told MPs the British and Irish governments "recognise the benefits" that come from the travel area.
Mr Brokenshire was responding to questions from East Belfast MP Gavin Robinson and Foyle MP Mark Durkan.
He said said he did not "want to see a return to the borders of the past".
It was Mr Brokenshire's first appearance at Northern Ireland Questions since he was appointed secretary of state last week.
He was also asked about the possibility of holding a border poll and repeated his view that the "conditions had not been met".
DUP deputy leader Nigel Dodds told the House that a united Ireland would be "financially catastrophic".
Mr Brokenshire appeared in the Commons alongside the new Northern Ireland Minister Kris Hopkins, who succeeded Ben Wallace.
Shadow Northern Ireland Minister Stephen Pound joked that he had now faced six Conservative ministers and he suggested he was being used "as a training aid for young thrusting Tories".
Shadow Northern Ireland Secretary Dave Anderson said the Conservative government was "badly prepared for Brexit" and he urged Mr Brokenshire to read recent reports which highlighted the economic difficulties.
The secretary of state said he was "always grateful for summer reading" and he said he would add the Labour MP's suggestions to his list.
Mr Brokenshire's predecessor Theresa Villiers was an interested observer during the session of Northern Ireland Questions, which is the last before the summer recess.

The crash happened on the A18 Mountain Road, in the vicinity of the Mountain Box, at about 07:50 GMT.
Police said the man was driving towards Ramsey in a white Citroen Berlingo when it was in collision with a blue Ford Transit coming the other way.
The Transit driver was taken to hospital but his injuries are not believed to be life-threatening.
Det Insp Mark Newey said the family of the driver who died have been informed.
The road was closed for several hours following the crash and witnesses are asked to contact police headquarters.
Northen Ireland's Ryan Farquhar is to ride a Tyco BMW factory Superbike at this year's Isle of Man TT road races.
[NEXT_CONCEPT]
Secretary of State James Brokenshire has told the House of Commons the continuation of the Common Travel Area between Northern Ireland and the Republic will be a "priority issue".
[NEXT_CONCEPT]
A 22-year-old man has died after the van he was driving was in collision with another van in the Isle of Man.