The 29-year-old Croatian has been a key player for Chelsea since he signed from Real Madrid on a permanent basis in 2019, after spending a season on loan at Stamford Bridge.
However, he has decided to leave the club as they undergo a major overhaul under new manager Mauricio Pochettino.
Kovacic is not the only Chelsea midfielder who is on his way out. N’Golo Kanté, who won the World Cup with France in 2018, will move to Saudi Arabian side Al-Ittihad when his contract runs out at the end of June.
Kovacic’s move to City will raise more questions about the future of Ilkay Gündogan. The German captain, who was instrumental in City’s remarkable achievements last season, has only a few months left on his contract and has been linked with a shock switch to Arsenal.