The 32-year-old has joined on a two-year deal from Serie A club Udinese, where he made 36 top-flight appearances last season.
He is City's first off-season signing after midfielders Aiden O'Neill, Richard van der Venne and Valon Berisha all departed following the premiers' 6-1 grand final thrashing loss to Central Coast.
"He has played at the top level in Turkey, Germany and Italy; just last season making 36 appearances for Udinese in the Serie A and he is a proven winner, having won two championships with Besiktas," City football director Michael Petrillo said in a statement.
"With his pedigree, work ethic, ability to control the play and versatility, he will be a key asset for our midfield.
"He has a great first touch and passing ability, which really suits the City style of play.
"On the pitch his natural football technique and attacking ability will fit right into our style of football, and off the pitch, he will bring leadership and experience to the dressing room."
Arslan, a former Germany and Turkey youth international, started his career in Germany with Borussia Dortmund's academy but played his senior football in the Bundesliga with Hamburger SV.
He made more than 130 appearances for Turkish giants Besiktas, where he won back-to-back Super Lig titles in 2015-16 and 2016-17.
Arslan also scored for Besiktas against Liverpool in the 2015 Europa League, then netted the final successful penalty in the shootout to knock the Premier League giants out in the round of 32.
"I have three kids and as a family, we decided to do something new after Udinese," Arslan said in a statement.
"I'm really happy with the decision now to come to Australia.
"I love the way Melbourne City play and the way they dominate the football.
"After my first talk with the director (Michael Petrillo) and coach (Rado Vidosic), I had a very good feeling and knew this was where I wanted to play."
11°C