The Bayern Munich boss had already revealed his decision to quit Bayern Munich at the end of the season and will now succeed the Chilean at the Etihad Stadium.
Manchester City have confirmed that Pep Guardiola will replace Manuel Pellegrini this summer.
Goal revealed at the start of January that City had already won the race for the 45-year-old after he revealed his decision to leave Bayern Munich when his contract expires at the end of the season.
Pellegrini had remained tight-lipped over his own future following Guardiola's announcement, but now City have confirmed that the Chilean, who signed a contract extension until 2017 last August, will be not be staying on beyond the end of the season.
A statement from City read: “Manchester City can confirm that in recent weeks it has commented and finalised contractual negotiations with Pep Guardiola to become MCFC Head coach for the 16/17 EPL season onwards.
“The contract is for three years. These negotiations were a re-commencement of discussions that were curtailed in 2012.
“Out of respect for Manuel Pellegrini and the players, the Club wishes to make its decision public to remove the unnecessary burden of speculation.
"I signed for one year more, but with the clause that the club or me can choose not to use that stuff now, so I finish here on the original date, June 30, so there is not the speculation.
"The club are not doing anything behind me, I knew this one month ago, but I don't think it's good to have rumour or speculation about these things, so I prefer to finish today, which I why I have told the players and I have told the Press. I also spoke to the club two weeks ago and said that I would do it."
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