Singh will be joined by Bayern teammate Christian Früchtl who will also go out on loan to the side that finished 16th last season.
Former Bayern player and current sporting director Hasan Salihamidžić insisted it's the right move for Singh.
"Christian and Sarpreet were key figures for our Reserves in the third division and played their part in winning the league. What they need at their current stage is match practice at a higher level.1. FC Nürnberg can offer them that in Bundesliga 2," Salihamidžić said via a statement.
"I have no doubt that Christian and Sarpreet will break through and gain important experience."
Singh scored seven goals and produced seven assists in 22 games for Bayern's second team this season, while he also saw minutes with the first team in the Bundesliga.
Earlier this week, the former Wellington Phoenix midfielder said he was open to a loan move.
“For me it could be a really good option to get minutes at a high level, but at the same time doing what I did this year and maybe even better by taking another step up could also benefit me," Singh said.
“Sometimes you feel hard done by, but sometimes you have to look at the bigger picture and think about where you are and what you’ve done,” he said.
“Obviously when I’m here I’m training and I’m one of them and want to play ahead of them. That's normal, I’m so competitive. But at the same time I understand that I have time to develop and I need to develop to play at this level week in, week out.
“It’s Bayern, so these players, they don’t just come onto the scene, they work hard for years or whatever and then they nail down their spot. Obviously I’m here, so it’s my job to take one of their spots but at the same time it’s good to be open to learning from them because they’re the best players in the world essentially, and that’s where I want to be.
“It’s a process, nothing happens overnight. You can’t just come here and expect to play in the first team. It takes time and you have to understand that. You can’t just, like I say, come in and want to play. You have to assess the situation and always be willing to get better.
“If you have that mindset then I think good things will come to you. Patience is very important."
Singh also discussed working with the likes of Miroslav Klose, who is now a coach at Bayern, and playing with Robert Lewandowski.
"It's incredible (to work with Klose), I think I'm truly blessed. I've been working with him closely, he works with the younger boys a lot.
Singh made his Bundesliga debut in December 2019 against Werder Bremen and Bayern's biggest star was on hand to help.
"Lewandowski was talking to me in the warm-up, and he said 'I'll come play on your side at the start just to help you get into the game', so he was always in the left-pocket when I was playing out wide.
"It was really nice to have someone like that say that to you and come and help you get into the game.
"I played simple when I got on the ball, tried to work as hard as possible and felt very comfortable there."
When asked what he has improved the most, Singh pointed to his physical development.
“The biggest improvement for me has been my body and how my body works and how it functions to be a proper footballer. I think my body is still developing and it’ll still continue to get better and better but to be in this environment to be able to do that you have the best trainers in the world, and it comes down to how much you want it.
“If you want it badly enough they’ll help you do it. I think from a technical point of view I was able to fit in perfectly fine but it took time for me to get my body up to scratch and I still believe there’s a long way to go but I can see improvements and it’s changing constantly. I feel very fit, healthy and strong.”
