The Paraguayan has struggled to make his mark for the club, and with the arrival of Sergio Aguero and the emergence of Edin Dzeko, he has found himself further away from the first team.
Santa Cruz returned to former club Blackburn Rovers on loan for the second half of last season, but made just seven league appearances after struggling with injuries.
The 30-year-old, who does not have a buyout clause in his contract, becomes Betis’ eighth signing of the summer and will be officially presented to the press in a conference on Tuesday evening.
A statement from the Spanish side read: "After intensive negotiations, the sports management has managed to close the addition of Roque Santa Cruz, who will play next season on loan at Betis."
City have also confirmed that Slovakian winger Vladimir Weiss will follow Santa Cruz to La Liga by joining Espanyol on loan.