The 20-year-old has signed a three-year contract at the club - with the fee to be decided by a transfer tribunal.
Commons was brought up in Nottinghamshire and he insists he has returned home by joining Forest.
"This is a fantastic opportunity for me," he told the club's website.
"It really does feel like I've come home.
"I used to watch Forest as a kid and was on the club's books for a while. I decided to leave because there were one or two things I didn't think were right for me at the time.
"But that was then. A lot has changed since then and I'm delighted to be back. I've always regarded Forest as my club and I really couldn't be happier at joining them."
