City were scuppered in their efforts to sign Mahrez during the last January transfer window but have finally now landed their man on a five-year contract. He has taken the number 26 shirt.
"I am so pleased to have joined City, a side playing great football under Pep Guardiola," Mahrez said on his long-awaited move.
"I think we can be successful over the coming years and I believe my own game can develop under Pep’s management."
Director of Football Txiki Begiristain added, "Riyad is a hugely talented player. He beats defenders and creates space.
"We're sure he will bring additional attacking quality to our squad."
Having joined Leicester from French club Le Havre, Mahrez became a key player as the club miraculously escaped relegation with a late run of form the following year, before exploding into life by scoring 17 goals and providing 10 assists en-route to Premier League glory.
Mahrez was named 2015/16 PFA Players' Player of the Year for and was named CAF African Footballer of the Year and BBC African Footballer of the Year for that same season.
He famously ran riot as Leicester beat City 3-1 at the Etihad Stadium in February 2016 and also helped put City to the sword in a 4-2 demolition at the King Power Stadium the next season.