The Frenchman, who spent seven years at the Emirates, has penned a three-year deal with the English champions.
He will officially link up with Manuel Pellegrini's outfit on July 1.
Sagna confirmed last month he would leave the Gunners after failed contract talks.
The 31-year-old becomes the latest Arsenal player to join City - following in the footsteps of Emmanuel Adebayor, Samir Nasri, Kolo Toure and Gael Clichy.
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