Sanchez joins with almost 10 years experience in the Argentine Primera Division, most recently with Club Atletico Temperley.
He was part of the squad who won the 2007 Under-20 World Cup, won the Copa Libertadores in 2009 with Estudiantes de la Plata and a league title the following year.
Sanchez also spent time playing for Columbus Crew in the American MLS and Greek side Levadiakos, before returning to his native Argentina.
Coach Kevin Muscat said he was looking forward to working with a player of Sanchez’s pedigree.
“Mati is a terrific signing for us,” Muscat said.
“His resume speaks for itself. He’s been in some very strong teams in Argentina, and more importantly, he’s tasted success at club level.”
Sanchez spoke about his excitement to play football on the other side of the world.
“It is a very exciting opportunity for me,” he said.
“I’ve spent a lot of time in Argentina, so to go on a football adventure to the other side of the world is amazing.”
“I would describe myself as a passionate player and a hardworking midfielder. I hope the Melbourne Victory fans will enjoy the way I play and I will give 100 percent of my quality to help the team.”
Sanchez will be the second Argentine to pull on a Victory shirt after Marcos Flores.