The former Australia, Leeds United and Leicester City central defender, who led Melbourne Victory to the Australian title in 2021, took over for the remainder of the season in late March.
The club have not lost in seven matches since, and on Saturday face Auckland FC in the playoff final looking to secure a record-extending sixth A-League title.
Sydney FC said they had conducted a three-month search for a new coach with Kisnorbo coming out on top of 19 other candidates from Australia and abroad.
"I've really enjoyed working with the players over the past six weeks," Kisnorbo, who has also coached in France and Japan, said in a news release.
"There is an exciting future ahead for this football club and I'm looking forward to being a part of it."