The move comes as a victory for Grunbaum's heirs, who have been fighting for the art's return for years.
Grunbaum died at the Dachau concentration camp in 1941.
"I hope this moment can serve as a reminder that despite the horrific death and destruction caused by the Nazis, it is never too late to recover some of what we lost (and) honor the victims," District Attorney Alvin Bragg said in a statement.
Timothy Reif, a judge and one of Grunbaum's relatives, thanked authorities for having "succeeded in solving crimes perpetrated over 80 years ago."
"Their righteous and courageous collaboration in the pursuit of justice -- unique among prosecutors and law enforcement in this entire nation, if not the world -- shine a bright light for all to follow."
As of June, Bragg's office had returned more than 950 looted or improperly acquired pieces of art worth $165 million, to countries including Cambodia, Pakistan, Egypt, Turkey and Italy.
- 'Degenerate' -
The seven Schiele drawings were seized by the office's Antiquities Tracking Unit earlier this year, from the Museum of Modern Art, the Ronald Lauder Collection, the Morgan Library, the Santa Barbara Museum of Art and the Vally Sabarsky Trust in Manhattan.
The works by Schiele, an Austrian expressionist artist, are valued between $780,000 and $2.75 million each, with the district attorney's office estimating their total value at more than $9 million.
Grunbaum, who was also an art collector and critic of the Nazi regime, possessed hundreds of works of art, including more than 80 by Schiele.
Schiele's works, considered "degenerate" by the Nazis, were largely auctioned or sold abroad to finance the Nazi Party, according to the district attorney's office.
Arrested by the Nazis in 1938, Grunbaum was forced while at Dachau to sign over his power of attorney to his spouse, who was then made to hand over the family's entire collection before herself being deported to a different concentration camp, in current-day Belarus.
The seven works whose restitution was announced Wednesday had reappeared on the art market after World War II in the 1950s, first in Switzerland and then making their way to New York.
A judge in 2018 had ruled in favor of the Grunbaum heirs concerning two different Schiele pieces, after a London art dealer argued that a sale of 54 Schiele drawings by Grunbaum's sister-in-law after his death was a valid transfer of the work.
But the judge rejected the idea that Grunbaum would have ever given her possession of the works voluntarily, writing that "a signature at gunpoint cannot lead to a valid conveyance."
That ruling was one of the first to come after the US Congress passed the Holocaust Expropriated Recovery Act in 2016, designed to relax the statute of limitations regarding recovering art stolen during World War II.
France passed its own law in July to make it easier for works of art seized by Nazi Germany that ended up in French museums to be returned to their Jewish owners.
The Grunbaum heirs are pursuing other works as well.
Last week, three different Schiele drawings were seized by the Manhattan District Attorney's office, from the Art Institute of Chicago, the Carnegie Museums of Pittsburgh and the Allen Memorial Art Museum at Oberlin College in Ohio.
