A source close to the player told Turkish-football.com that the loan deal will be for one-season and that Unal is pleased with joining a top Eredivisie outfit.
Unal was linked with a return to NAC Breda but did not want to play second-tier football next season and pushed for an Eredivisie move instead.
The Turkish international striker found the back of the net nine times and setup two goals in 11 matches for NAC Breda after joining the club in January.
NAC narrowly missed out on promotion to the Eredivisie however, Unal wants a more challenging role next season.
Unal joined City on a £2 million move from Bursaspor last summer but is currently unable to play in the Premier League due to not having a work permit.
The 19-year-old striker will have to play in Europe for another season until he gets a permit to play in England despite being contacted to City.
Twente also confirmed the loan move on their official Twitter account.