The 17th century polychromed alabaster bust of Dr Peter Turner, an eminent physician and botanist, was recovered by a curator at the Museum of London after being consigned for sale earlier this year at Dreweatts.
Church officials notified the Art Loss Register who alerted the auction house and the bust was removed from sale.
Valued at around £70,000, the bust was traced back to several owners across Europe, including Belgian dealer Paul de Grande and another buyer from the Netherlands. The ALR's executive director and general counsel, Christopher Marinello, said he did not believe any of the previous buyers knew the bust was stolen and added: "Both the Dutch dealer and Mr de Grande have reinforced my faith in the trade and their willingness to negotiate rather than litigate."
St Olave's Church in the City of London was reunited with the bust last month and has since been consulting the Diocese of London on how best to reaccommodate it.