The 23-year-old has signed a five-year contract, worth a reported ?200,000 a week.
No fee was confirmed by either club, but it is thought City have paid Atletico Madrid ?35million for Aguero, eclipsing their previous high of ?32.5million for Brazil forward Robinho in August 2008.
He becomes manager Roberto Mancini's third signing of the summer, following the arrivals of Arsenal defender Gael Clichy and Partizan Belgrade's Stefan Savic, and takes the Italian's spending in this window to ?48million.
Aguero had already declared himself a Manchester City player on Wednesday night after a day of talks with club officials.
And, speaking tonight after sealing the deal officially, the striker said he was ready to play in the Premier League.
"I don't think I'll have too many problems settling into the team," he told City's official website.
"I'll obviously be doing my best to do what the manager asks and try to work the way he wants me to, and of course he will know how he wants to use me.
"Once I'm out on the field I will get to know my way round, but I can't say that for sure because I have not even made my debut yet.
"But I'm sure everything will be fine. I'm going to be relaxed about it."
The arrival of Diego Maradona's son-in-law once again opens up questions about the future of Carlos Tevez, for whom Aguero is seen as a natural replacement.
Tevez is adamant he wants to leave to be nearer his wife and two daughters in Argentina, though he would also consider a move to Europe.
However, Inter Milan director Marco Branca today insisted the Italian club had no plans to sign the Argentina international after he was pictured meeting Tevez in Sardinia.
"There was only one meeting, and it was entirely fortuitous and enjoyable," he said.
"But it happened on the beach and was not followed up."
That seems to leave Tevez without a suitor who can afford to buy him after the collapse of a deal with Corinthians.
However, for now, City will focus on their new player.
Younger than Tevez by four years, the former Atletico star has been a prolific goalscorer in Spain's Primera Division and that is why he became one of the most sought-after strikers in Europe.
Atletico had resigned themselves to the fact they would lose their prized asset when he announced in May, before departing to play for Argentina in the Copa America, that he wanted to leave.
Aguero's preference was to remain in Spain, with city rivals Real seemingly the most likely destination, but Atletico were keen to resist such a move.
The offer from City represented a better option for the Madrid side, although Italian club Juventus were also interested.
Atletico confirmed the deal minutes before City, and wished their former player a fond farewell.
"From this moment the Argentinian player ceases being part of our squad," said a club statement. "The club thank him for his services during these five seasons and wish him luck in his new role."
Aguero is the latest in a line of high-profile signings for City from the Spanish league, and he is already familiar with new team-mates Yaya Toure and David Silva from having played against them in La Liga.
"Of course the are great players, and yes I have played against them in the past but now they are here, in a team which right now is one of the biggest teams in England," Aguero added.
"So for sure they are great players and I'm lucky to be playing alongside them. I'm happy about that."
Asked what he would add to the side, Aguero said: "My style has always been to fight to the death for every ball, and give 100% in every game.
"Be concentrated to the maximum in everything I do; movement, running off the ball, winning the ball back and scoring goals. I'm not a player who can do everything, but I still have plenty to offer."
Source: Team Talk
Source: Team Talk