The 18-year-old attacker had long been linked with a move to Germany, with Moenchengladbach and Fortuna Dusseldorf reportedly interested.
Moenchengladbach confirmed the signing on Saturday morning AEST, with Theoharous to initially play with the club's under-23 side in Regionalliga West.
"Christian Theoharous is a promising player," Gladbach's director of youth development Roland Virkus said. "We are delighted that he has chosen Borussia."
Theoharous made 18 A-League appearances in the 2017/18 season for Victory, scoring once, while he also played all six AFC Champions League matches in 2018.
The 2017/18 season was a breakout for Theoharous who had previously only made one seven-minute appearance off the bench for Victory.
The Bentleigh Greens junior joins ex-Brisbane Roar forward Kwame Yeboah at Gladbach, while Australians Mathew Leckie, Craig Moore and Damian Mori have previously played for the five-time Bundesliga champions.
Perth Glory teenager Jacob Italiano has also signed a pre-contract with Gladbach but won't join the club officially until 2019 when he turns 18.
Gladbach finished the 2017-18 Bundesliga season in ninth, under Dieter Hecking who previously coached Aussie pair Dario Vidosic and Matt Spiranovic at Nurnberg.