Spain midfielder Losada captained Barca to Champions League glory last season as part of a historic treble which also included domestic league and cup triumphs.
The 30-year-old returns to England having previously played in the Women's Super League for Arsenal between 2015 and 2016.
"I'm so excited for next season and to have been able to join one of the best clubs in the world," she told mancitycom.
"As soon as I had the offer from Manchester City, I didn't have any doubts about it - I knew that it was time to leave Barcelona and close that chapter of my career after one of the best years of my life.
"I've always said that I missed the English league - I feel like it brings out the best in me as a player. I am so excited to return to it now and be a part of this fantastic football club."
Born in Terrassa, Catalonia, Losada joined Barcelona's youth set-up as a teenager and won six league titles and the Copa de la Reina on seven occasions with the Spanish giants, in addition to conquering Europe courtesy of May's 4-0 win over Chelsea in Gothenburg.
She has also enjoyed brief stints at Espanyol and Western New York Flash, plus her spell with the Gunners, which yielded FA Cup and League Cup winner's medals.
At international level, Losada has scored 13 goals in 64 outings for Spain, as well as representing Catalonia.
City head coach Gareth Taylor said: "Her winning mentality and desire to be at the top of her game matches our own ethos here at City, and the fact that she has already previously made her mark in the FAWSL speaks volumes about her adaptability.
"Vicky's experience in high-pressure situations will also be very important to the team as a whole as we aim to lift more trophies in the near future, and we're very much looking forward to working with her over the next few years."