The 24-year-old goalkeeper will spend the duration of the 2019/20 campaign with the Bundesliga outfit, subject to international clearance.
READ | City sign Mannion
City agreed a deal to sign the United States No.1 from Columbus Crew SC last December, though he remained in Ohio for the first half of the 2019 MLS season.
Steffen made his final appearances for the Crew on 1 June, in a 2-2 draw with New York City and departed having kept 26 clean sheets in 84 appearances, scooping the 2018 MLS Goalkeeper of the Year Award in the process.
The next stage of his development sees him return to Germany, where he previously spent two seasons with SC Freiburg and played 14 times for their reserve team.
Everyone at Manchester City wishes Zack the best of luck for his time with Fortuna Dusseldorf.