The 18-year-old AIS graduate made his A-League debut with Western Sydney Wanderers in January and played eight games during the season.
Kuzmanovski also scored for the Young Socceroos against Panama during his Under-20's national team debut this year.
Melbourne City coach John van't Schip said the former Wanderers Youth League player would improve after making the move south.
"He will bring added depth to our forward line and although he is still young, he has the ability to become an important player for us next season," he said.
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