Guardiola has signed a three-year contract believed to be worth £15m a year – an increase on his existing €17m (£13m) deal at Bayern – to succeed current City boss Manuel Pellegrini in the summer.
The timing of the announcement – if not the news itself – came as a surprise and overshadowed a transfer deadline day lacking in high-profile moves involving the Premier League’s biggest clubs.
City are likely to be busier in the next window, however, with two-time Champions League-winner Guardiola expected to be handed £150m to spend on making the team as successful as his Bayern and Barca sides.
The Spaniard, 45, has risen to the status of the game’s most sought-after coach by winning 16 major trophies in six seasons at Barca and Bayern. He is on course to win a third successive Bundesliga this year.
City admitted that they had been among the clubs who tried – without success – to woo Guardiola after his resignation from boyhood team Barca in 2012, only for him to plump for a move to Germany.
“Manchester City can confirm that in recent weeks it has commenced and finalised contractual negotiations with Pep Guardiola to become head coach for the 2016/17 season onwards,” they said. “The contract is for three years. These negotiations were a re-commencement of discussions that were curtailed in 2012.”
Guardiola’s decision to join City will be seen as a major blow to their rivals, especially those searching for a new manager or who may need one in the summer, such as Chelsea and Manchester United.
Pellegrini, who won a Premier League and Capital One Cup double in his first season and still has City in contention for four trophies this term, learned his fate last week and revealed that he had insisted his departure be announced now.
The Chilean, 62, endured months of uncertainty and questioning about his position last year before being handed a one-year contract extension on the eve of the current season.
“I don’t think it is good to have speculation about different things,” Pellegrini said. “That is why I have told the press and told the players. I told the club two weeks ago that I would do it.”
Chelsea have been linked with a move for Pellegrini, who is likely to be in demand having proven his ability to deliver success in England.
“Out of respect for Manuel Pellegrini and the players, the club wishes to make its decision public to remove the unnecessary burden of speculation,” City added.
“Manuel Pellegrini, who is fully supportive of the decision to make this communication, is entirely focused on achieving his targets for the season ahead and retains the respect and commitment of all involved with the leadership of the club.”