The 22-year-old joins the Tinners on a permanent basis after spending time on loan with City last term.
Sanders, who started his career at Premier League side Nottingham Forest, made 27 appearances for Truro in 2023-24 and scored one goal, in a 2-1 victory away at Chelmsford City.
He first joined York City on loan from Forest during the 2021-22 campaign and helped the Minstermen to National League North promotion, under the management of recently appointed Truro chief John Askey.
The temporary switch from the City Ground was then made permanent in July 2022 with York playing at Step One. Sanders made a total of 20 National League appearances in 22/23 before he moved on loan to Boston United.
Back at York for the start of 23-24, Sanders was the subject of another temporary switch to Truro and after a string of accomplished performances as City kept hold of their National League South status, he becomes the first signing for new boss Askey.
“I enjoyed myself playing on loan down here last season,” Sanders told trurocity.co.uk.” I got quite a lot of games under my belt and it was a great group of lads.
“With that in mind, it was an easy decision to come back and play under John again. I know what he wants and what he likes. I enjoyed playing under him because he is very to the point. He wants players to work for the team, be really committed and give your all.”
Sam Sanders becomes the first signing for new City boss John Askey
Meanwhile, Tinners boss Askey, added: “I had Sam at York after he came through at Notts Forest and he was one of the reasons we got promoted at York.
“He did well for me but then I moved on and he hasn’t played as much as he would have liked at York, hence why he came to Truro.
“I am pleased to get Sam because he is the right character and he’s a good age. He is somebody who has got promoted from the North version of the division Truro play in so he knows what it is all about.”