McMullan played 35 times last season and was named in the Championship Team of the Year for 2022/2023 as they won promotion to the Premiership.
The winger has considerable experience in the top two divisions in Scotland with both Dundee clubs, having switched from United in 2021.
The 27-year-old was an underage international at all grades with Scotland having started his career at Celtic.
The Candystripes were seeking reinforcements with Colm Whelan ruled out for the rest of the season.
Injury issues have plagued Derry in the first half of the season while striker Jamie McGonigle has struggled to find the target.
Ollie O’Neill and Matty Ward have seen their loan spells finish.
McMullan will not be eligible to play in tonight’s vital away game to Shamrock Rovers as the top two meet in the Premier Division at the Tallaght Stadium in Dublin (kick off 8 pm).
He can feature from Saturday, July 1, including City’s European campaign with a first round Europa League Conference tie with HB Torshavn to come.
Ahead of tonight’s, City manager Ruaidhri Higgins said: “We know how good a side they are, but we’ve shown we know how to win against them and that’s what we’ll be trying to do tonight.”