Fornaroli, 28, will remain with the City until the end of the 2018-2019 A-League season as part of the new marquee player contract, which will feature a significant pay rise for the Uruguayan striker.
Fornaroli scored 25 goals in 27 games last season on his way to setting the record for most goals scored in an A-League season.
While the frontman still had a year to go on his existing contract with the club, Fornaroli said he was delighted to extend his stay in the Victorian capital.
“I am really happy to be with this Club; my first season was very enjoyable, but I want to stay here, hopefully improve more and help the team be successful and achieve its potential,” Fornaroli said.
“The players, coaching staff, the facilities and the support provided to players is amazing. It is a very professional and family friendly club, which plays the type of football I like to play and this is where I want to be.
“My family and I have been made to feel very welcome; we love the Club, the city, the lifestyle, the culture and Melbourne, but first and foremost I am here to play football and win for this Club.”
On Cahill, who is widely-tipped to become the highest-paid player in Australian team sports when his deal with Cuty is confirmed, Fornaroli had a clear message.
"Sign. I say sign," Fornaroli said.
Fornaroli believes the club would have the ingredients for the success that has so far eluded City, should Cahill join the group.
"If Tim comes, it's perfect. A big, big player for our team," he said.
"I hope this. But I don't know if he signs or if he's coming."
Fornaroli said he didn't mind whether he was moved back into a No.10 role or out wide to accommodate Cahill, insisting "we can play together".
Whether or not he will get to depends on Cahill, who is reportedly close to an announcement and has undertaken a medical at City's affiliated club in New York.
City coach John van’t Schip said Fornaroli’s passionate and professional approach made him a central figure within the first team.
“Bruno is so important to us; the way he plays, the way he fits into the structure, his leadership and work ethic make him very important to us," he said.
“Last season Bruno demonstrated his ability, making a significant contribution to the team and playing in an entertaining and determined way. He not only scored a record number of goals, but he provided an important link between attack and midfield.”