The Herald Sun report Kurz had been in negotiations with the four-time A-League champions since May and emerged as the key candidate from a final six-man shortlist that also included John Aloisi.
Despite Victory taking extra time to survey several overseas options, the club's selection panel - headed by chairman Anthony Di Pietro - felt the former Adelaide United boss fit the bill.
Kurz led the Reds to FFA Cup glory last season, as well as an A-League semi-final, and will now be tasked with returning an undermanned Victory outfit back to the top of Australian football.
Muscat's resignation preceded a turnstile of departures at the club, including Keisuke Honda, Georg Niedermeier, Raul Baena and Kosta Barbarouses, and now leaves his German counterpart with plenty of work to do.
The star-studded Victory finished third last season, before crashing out with a humiliating 6-1 semi-final defeat to eventual champions Sydney FC.
A popular figure among A-League circles, Kurz's surprise release from United saw Brisbane Roar also pursue his signature prior to the appointment of Robbie Fowler.
