The 32-year-old Argentinian has moved for an undisclosed fee in a switch that sees him reunited with City boss Manuel Pellegrini.
The pair previously worked together at Malaga after Pellegrini signed Caballero for the Spanish outfit in 2011.
Barclays Premier League champions City have been looking for a new goalkeeper to provide competition for first-choice stopper Joe Hart following Costel Pantilimon's release at the end of last season.
Source : PA
Source: PA