The 42-year-old righty went on the 15-day DL on June 21 because of tendinitis in his left knee. It was the fifth time in the last three years that he'd been out with an injury.
The Red Sox optioned right-handed reliever Chris Smith to Triple-A Pawtucket after Wednesday night's loss at Tampa Bay.
Timlin is 3-3 with one save and a 7.06 ERA in 24 games for Boston. At the time he went on the DL, he didn't blame his sore knee for his pitching problems.
Timlin made three rehab appearances at Pawtucket, retiring all nine batters he faced with three strikeouts.
"The reports were as good as the numbers," Boston manager Terry Francona said before Thursday night's game.
Francona was glad to have the veteran reliever back for the matchup at Yankee Stadium.
"He's been here a lot of times," he said. "He's thrown the ball well."
Going into the series opener, Timlin had pitched 82 times against the Yankees in his career, going 4-5 with 12 saves and a 4.07 ERA.