Capable of playing at 9 or 10, last year Auckland born Fotuali'i committed himself to Manu Samoa, making his international bow in a 13-10 win over Japan in Tokyo during October.
"This is a great move for me and I'm really excited about coming to Wales and joining one of Europe's leading rugby organisations," said Fotuali'i.
"There are a lot of similarities between the set-up at the Crusaders and the Ospreys, both have a great reputation for bringing through young talent to represent their home team and the national side, and I'm really looking forward to a new experience.
"The Ospreys have a great set-up, with a fantastic stadium, quality training facilities, ambitious coaches and a good squad that is a mix of experienced internationals and young home grown talent, and this move is a fantastic opportunity for me. Going to the Ospreys is going to provide me with a real challenge, both on and off the field, but it is one that I feel is right for me at this stage of my rugby career."
Ospreys Elite Performance Director, Andrew Hore, said:
"Kahn is an extremely versatile player, who is renowned in New Zealand for his professionalism and his hard working ethic, which will make him a great asset to the Ospreys. He is capable of playing to a very high standard in two key positions, and with the versatility and experience he has, provides a level of flexibility to the coaches that will prove to be extremely useful across a long season."