Cohen, 53, was taken to the Metropolitan Detention Center in Brooklyn, according to his lawyer, Jeffrey Levine. Cohen had been released from a federal prison in May due to concerns over possible exposure to the novel coronavirus.
He had completed about a year of a three-year sentence for his role in hush money payments to two women, as well as for financial crimes and lying to Congress about plans to build a Trump Tower in Moscow.
Cohen was ordered to a federal courthouse in Manhattan to convert his furlough to home confinement, Levine said outside of the courthouse.
He said they were presented with an agreement that barred Cohen from having any contact with news media organizations and from posting on social media.
"I've never seen any language like this in my life," Levine said.
After objecting, Levine said that the US Marshals Service came with "shackles" and ordered Cohen remanded to the jail in Brooklyn because he failed to agree to the terms.
The Bureau of Prisons said Cohen refused the conditions of his home confinement and as a result was returned to a detention facility.
Levine said he was working to resolve the dispute over the terms of home confinement.
Cohen, who once said he would "take a bullet" for Trump, later turned on his former boss and cooperated with Democratic-led congressional inquiries. Trump has called Cohen a "rat." Cohen has called Trump a "racist," a "con man" and "a cheat."
At the time of Cohen's release in May, he wrote on Twitter that "there is so much I want to say and intend to say. But now is not the right time. Soon."
On July 2, he tweeted that he was close to completing a book.
Thursday's events come a week after Cohen was spotted at a sidewalk table at the French restaurant Le Bilboquet near his Park Avenue apartment in Manhattan, according to the New York Post newspaper.
Levine had told the newspaper that the dinner did not violate the terms of Cohen's release from prison.
The two women who were paid hush money, pornographic film star Stormy Daniels and former Playboy model Karen McDougall, said they had sexual relationships with Trump. The president has denied having relationships with either woman.Cohen had originally been eligible for release in November 2021.