The 36-year-old left Chelsea at the end of last season after a hugely successful 13-season stint, during which he became the club's all-time record goalscorer with 211.
He becomes New York City FC's fourth player and will join prolific Spanish forward David Villa at the new MLS franchise.
New York City are owned by Manchester City and Major League Baseball's New York Yankees and will play at Yankee Stadium when the 2015 MLS season starts in February.
And New York sporting director Claudio Reyna is thrilled to have signed Lampard, describing him as "one of the greatest players over the last 15 years".
Reyna said: "He is a professional, a leader and he ticked all the boxes in terms of the qualities to help grow our team."
And, speaking at a press briefing to announce his move, Lampard revealed he took little persuading to make the move across the Atlantic.
"Why not choose New York City," he said. "Talking about it ticking all the boxes, personally, for me, it does exactly the same.
"It's a very exciting challenge for me in life terms. I've seen a real long-term plan and I wanted to be part of that. I want to test myself, I want to carry on challenging myself.
"I had a fantastic 13 years with Chelsea that I can look back with pride upon. It was a good time for myself and Chelsea that I moved on."
David Beckham played in the MLS for LA Galaxy but Lampard says that was not a factor in his decision to move to the States.
"I know David pretty well, but we're not on every day speaking terms," he said. "I've spoken to him about his experiences in the MLS but the decision was all mine.
"There's a lot of new challenges here. I'm coming to a great city and I wanted to show people that I can play good football."
However, New York City FC will not begin playing until 2015 so there is a possibility Lampard could line up for another club in the interim on a short-term basis.
"I'm going to keep fit, that's the main thing," he said. "How I do that is not clear yet. I'm going to sit round with people at the club and sort that out."
David Villa will play for another City-owned club, Australia's Melbourne City FC, before teaming up with New York, but Reyna said there were a "number of options" open to Lampard.
Lampard has 106 England caps and was in the squad which exited at the group stages in the recent World Cup in Brazil.
Having resolved his future at club level, he says he will now decide whether he will seek to continue his international career.
"In terms of England, I've had a bit of time after the World Cup, which was obviously a huge disappointment," he said.
"I now need to think about England and think about what I want to do next. Now I know where I'll be playing my football next year I can make that decision."