The 22-year-old’s spell at Ibrox, which was originally set to run until the summer, has been cut short, with the player returning to his parent club to help them from the very start of the new MLS season.
Sands will add European experience to the New York City team, having played both in the Europa League as well as the Champions League.
The defender went on to represent Rangers in the Europa League final, a match they eventually lost on penalties to Eintracht Frankfurt.
The fans of his former team were picked for particular praise by Sands, who insists that he is taking a lot of positive memories with him back to the USA.
“I would like to thank Rangers for the fantastic opportunity to play with a top-notch European team”, Sands told New York City’s official website.
“Reaching the Europa League final, playing in the Champions League, and winning the Scottish Cup are just a few of the many positive memories that I will take away with me.
“The level of support from the Rangers’ fans is second to none.”
Sands’ departure is expected to be followed by more exits from Ibrox in the summer as Michael Beale looks to reshape his squad.
