The newly-formed Major League Soccer club, who are jointly owned by Manchester City and the New York Yankees, confirmed on their Twitter account that the 32-year-old was their first-ever player.
The club tweeted: 'Welcome to New York City: David Villa (@Guaje7Villa) officially signs as £NYCFC's first ever player. £VillatoNYCFC.'
Villa makes the move to America after helping Atletico Madrid win their first Primera Division title since 1996 last season and also reach the Champions League final, where they lost to Real Madrid.
Prior to joining Atletico in the summer of 2013, Spain's record goalscorer spent three hugely successful seasons at Barcelona while he has also represented Valencia, Real Zaragoza and Sporting Gijon.
Villa, who has never before played his club football outside of Spain, said during an interview posted on the Atletico website on Sunday that he was embarking on a new challenge after receiving 'an irresistible opportunity', although he did not specify what it was or where.
However, there was widespread speculation that Villa was headed to New York City and that move was confirmed on Monday.
Villa said on his new club's website, www.nycfc.com: 'Throughout my career I've always tried to keep pushing myself to achieve new targets and this represents another important goal for me.
'I want to try and help MLS continue to grow, through playing, working hard, scoring goals and at the same time try to make New York City FC become the best team in the league.
'It's a real honour that the people who have formed the club have focused their attention on me. I'm keen to do the best I can, take on board that extra responsibility and prove my worth by repaying the confidence they have shown in me.'
Aside from his success at Atletico, Asturias-born Villa won two Primera Division crowns and the Champions League among a host of titles at Barcelona, while he also lifted the Copa del Rey with Valencia and Zaragoza.
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