Coach Ricki Herbert said he had been impressed with the 21-year-old since he arrived on trial a fortnight ago.
"He has done everything right and fitted into the squad well," Herbert said.
"With such a long time until the season starts. we've been taking our time and making sure we sign the right sort of player.
"Niko fits the bill well. He is a natural fullback who has had A-League experience and it is a bonus that he falls into our under-21 bracket," Herbert said.
"I thought he was the best player on the park in our 2-1 win over the Junior All Whites on Sunday.
"The challenges will keep coming for him but I am sure he is capable of meeting them."
"It will be an honour to play for the Phoenix and I'm delighted that Ricki has given me the opportunity, added Tsattalios.
"I've been out of professional football for one and a half years and can't wait to get back into it.
"I feel like I'm starting from scratch with a clean slate and I'm really excited.
"The Phoenix boys are an amazing bunch... They made me welcome at training and it was the same when I played my first game.
"Now I just want to get stuck in and show Ricki he has made the right decision."