Sanders had been away dealing with illness and what the team termed personal issues. Earlier this week, one media report on Twitter suggested the 26-year-old was contemplating retirement.
"I haven't said anything like that," Sanders said Tuesday. "I figure with the absence, something was going to come out like that. It's not true.
"What is true is I'm in the process of trying to do what's best for my psyche and my physical health."
While saying he was ready to start working his way back to action, Sanders remained vague about the reasons for his absence.
"I'm trying to get to the root of a lot of issues and get them corrected. Without getting them corrected, I don't think basketball is something I could do," he said.
Sanders was the Bucks' starting center and defensive anchor, though the club has gone 4-3 since his departure. Sanders, the Bucks' highest-paid player, is in the first year of a four-year, $44 million extension he signed early last season, when he played just 23 games.
In 27 games this season, Sanders is averaging 7.3 points and 6.1 rebounds, and he leads surprising Milwaukee in blocked shots. He said there currently is no timetable for his return to the court.
"There's not. I'll have to go with [the team's] recommendations. See what they say is best for my health going forward," he said.
Coach Jason Kidd said after Tuesday's game that it was good to have Sanders back with the team, but the fifth-year center won't travel with the Bucks for their game Wednesday in Philadelphia.
Before Tuesday's game, Kidd said, "Same situation. [Sanders' issue] is personal. The organization has done everything to help him. It's not a distraction.
"It hasn't affected us, and we just want Larry to get back as soon as possible. He makes us a better team."