The USA goalkeeper is moving to City from Columbus Crew.
Steffen will remain at Columbus and join City on July 9 2019, when the MLS transfer window opens. The transfer fee has not been disclosed, but is the largest in Columbus' history.
Steffen has signed a four year deal, and said: “Any success that I have had as a goalkeeper in MLS with Crew SC is a testament to those around me who have pushed me – teammates, coaches, staff, family, friends and supporters.
“Today's announcement regarding next summer is a special moment for me and I look forward to finishing my time with this Club on a strong note. I am eager to continue to put in the work to improve and be the best teammate I can."
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