The 34-year-old arrives as a replacement for James Trafford, who left City to join Leeds United.
Rulli returns to Manchester City after spending the 2016/17 season at the club without making a senior appearance. He joins as experienced cover, with Gianluigi Donnarumma remaining City's first-choice goalkeeper.
"This is an amazing opportunity for me and one I had to grasp," Rulli said in a club statement.
"When the chance to join Manchester City comes along, you have to take it. Everyone knows what an impressive club this is."
Rulli has won eight caps for Argentina and was part of the squads that won the 2022 World Cup in Qatar and the 2024 Copa America.
The goalkeeper has enjoyed spells across Europe with Real Sociedad, Montpellier, Villarreal and Ajax Amsterdam. During his time at Villarreal, he played a key role in the Europa League final victory over Manchester United in 2021.