McGree became an overnight global sensation for a scorpion kick goal against City in a 2-1 defeat that sent Newcastle Jets to the 2017/18 decider.
The 19-year-old will continue in the A-League for another year after signing a one-year loan deal from Club Brugge in the Belgian top flight.
Riley McGree said he was excited about the move after speaking with coach Warren Joyce.
"I could see that this club is going places, and I want to be here winning more trophies," McGree said.
"Getting young players in and creating a good, stable base as a club is an important thing to do, and I’m excited to be part of it.
“I came here for the professionalism of the club, the high-quality facilities and coaching staff and players.
"Now I want to get a good pre-season under my belt, have a good season and develop myself as a player.”
McGree made his first Hyundai A-League appearance in March 2016 as a 17-year-old for Adelaide United, and in August 2016 joined the Reds on a senior contract.
His first goal came in January 2017, and in July 2017 he moved to Belgium to join Club Brugge, before returning to Australia as an injury-replacement player for Newcastle Jets.
The junior international has scored four goals in six appearances for his country and was named in Ange Postecoglou’s 30-man squad for the 2017 World Cup qualifiers against Iraq and the UAE.
Michael Petrillo, Director of Football for Melbourne City, described McGree as a "bright and ambitious young prospect".
"He’s a versatile midfielder who has a deft touch and is very capable of both scoring goals and of creating chances for those around him" Petrillo said.
"Pre-season starts in two weeks and I know he is itching to get training with the rest of the squad.”