The 27-year-old arrives in Melbourne with a wealth of experience, having had stints across Spain, Uruguay, Mexico and Argentina.
Capable of playing out wide or as an attacking midfielder, Cabrera's arrival affords new City coach Erick Mombaerts with a pivotal piece to build around ahead of the 2019-20 season.
"Javier is an exciting, creative player who is as comfortable out wide as he is playing centrally as an attacking player,” City Director of Football Michael Petrillo said.
"He has a lot of experience in highly competitive top divisions in Uruguay, Argentina and Mexico and will help provide the creative spark and attacking ability our game style demands."
Cabrera spent last season in his homeland with Montevideo Wanderers, where he managed one goal in 23 appearances, and sees City as the perfect club at this stage of his career.
"I am proud to sign for Melbourne City for the next two years, and to test myself in the A-League," Cabrera said.
"The club has clear ambitions and focus to play its football in an exciting, attacking style and I’m looking forward to contributing to its future success with our new head coach.
"I enjoy playing free-flowing, attacking football and helping create chances for my teammates. Melbourne is world famous for its sporting culture, and I can’t wait to experience that and to meet our fans."
Both Cabrera and fellow signing Josh Brillante have already joined their new City teammates ahead of a busy pre-season schedule.
