The central defender spent the first half of the season on loan at Celtic, but played just 64 minutes during his time with the Scottish champions, who have had a turbulent season to say the least.
The 20-year-old's parent club City and despite interest from several clubs, he has joined German side Koln who sit 11th in the Bundesliga under manager Lukas Kwasniok.
Simpson-Pusey spoke on the move via the club website and said he cannot wait for the challenge ahead.
“The move to Köln is a fresh start for me, and one I’m really looking forward to. As I looked into FC and the history around the club, I wanted to get started right away.
“Now I’m looking forward to getting to know my new team-mates – and Hennes, when I get back to Köln. I want to play as much as possible here and help FC to reach their goals this season.”
Sporting Director, Thomas Kessler also opened up on the deal as his side aim to push up the table, closer to the European spots.
“Jahmai is a talented player who, despite his young age, already has experience at the highest level. He enjoyed his footballing education at one of the world’s best clubs and is excellent on the ball.
“With his signing, we have secured an option at the centre-back position and the necessary depth at that position. Jahmai brings a high level of motivation and a real desire to the club, which will have a positive influence on the competition for places.”
Reports suggest the loan agreement includes a buy-option which is said to be around £10M and City are also suggested to have a buyback agreement is the defender excels in the future.