The near-complete skeleton of the Tyrannosaurus bataar was handed over to Mongolian officials at a ceremony in New York earlier this week.
Mongolia had demanded the return of the dinaosaur last year after a commercial paleontologist sold it at a Manhattan auction last year for USD 1.05 million.
The US officials seized the bones last year after Mongolia said they were stolen, 'BBC News' reported.
"We are very pleased to have played a pivotal role in returning Mongolia's million-dollar baby," US Attorney Preet Bharara said.
Mongolian Minister of Culture, Sport and Tourism Oyungerel Tsedevdamba said they would be setting up a new dinosaur museum, as "we never had dinosaurs' museum before".
In March 2010, the bones of the dinosaur, discovered in the Gobi Desert, were smuggled into the US from UK.
Mongolia has laws that protect fossils - they are the property of the state and their export is banned, the report said.
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