The move was widely expected with Harrison having spent the past two campaigns at Leeds, becoming a first-team regular under Marcelo Bielsa.
The 23-year-old made 46 appearances as Leeds won the Championship and sealed promotion to the Premier League last term, scoring six times and providing eight assists.
Leeds also confirmed the loan is with a view to a permanent deal, with the club preparing for their first top-flight campaign in 16 years.
“It’s a great opportunity to come back to a great club where I have been settled for the past two years,” said Harrison.
“Playing in the Premier League has always been a dream of mine and to be doing that with Leeds in an amazing opportunity.
“This is a great club to be a part of, I’ve developed a lot in the last two years, and I’ve learnt a lot working under Marcelo [Bielsa] and with this great group of lads.
“My game has become more well-rounded, finding different ways to improve my game has been crucial to my development and now I’m happy to be back playing at one of the highest levels.”
Harrison joined Manchester City from sister club New York City in January 2018 but has yet to make a senior appearance for the club, spending a short spell out on loan at Championship side Middlesbrough before moving to Elland Road.
On a busy night for the West Yorkshire club, teenager Joe Gelhardt also completed a move to Leeds from Wigan on a four-year contract.
The 18-year-old academy graduate made 19 appearances for the Latics last season, though the campaign would end in bitter disappointment when the Lancashire club were docked 12 points for going into administration, resulting in their relegation to League One on the final day of the season.
Harrison and Gelhardt becomes Leeds' third and fourth additions of the transfer window, with Helder Costa and goalkeeper Illan Meslier having made their stays permanent following impressive loan spells from Wolves and Lorient respectively in 2019-20.