The midfielder who has been unsettled at Leicester following failed moves last season is now undergoing medicals at City.
Mahrez made 180 appearances in Leicester City colours, scoring 48 goals.
Leicester City will face a real fight to keep hold of the no-nonsense defender following the competition and it remains to be seen whether one of the top clubs can entice him out of the King Power Stadium.
He then came on as a substitute the next day, having missed the previous two games, as Leicester were beaten 5-1 away by Pep Guardiola's City, and featured in every match for the Foxes for the rest of the season.
"I am so pleased to have joined City, a side playing great football under Pep Guardiola".
"Watching them from afar has been a pleasure".
City director of football Txiki Begiristain is confident Mahrez will prove a valuable addition as the champions look to mount a successful defence of their Premier League title and succeed in Europe. "They're redefining the English game and I wanted to be a part of it", Mahrez said on his new club's website.
Good signing for Leicester City?
Mahrez joined Leicester from Le Havre for £400,000 in 2014, and was named the PFA Players' Player of the Year during their surprise Premier League triumph in 2015-16.