The 27-year-old forward will wear the number 26 shirt of the Etihad outfit as the club announced the signing on Tuesday evening.
“I am so pleased to have joined City, a side playing great football under Pep Guardiola,” Mahrez said.
“Watching them from afar has been a pleasure. Pep is committed to playing attacking football, which is a perfect for me, and City’s performances last season were outstanding. They’re redefining the English game and I wanted to be a part of it.
“I think we can be successful over the coming years and I believe my own game can develop under Pep’s management.”
On his part, City’s Director of Football Txiki Begiristain, said, “Riyad is a hugely talented player. He beats defenders and creates space.
“Over the past few years, he has established himself as one of the Premier League’s most exciting players. We’re sure he will bring additional attacking quality to our squad.”