The Marseille man joins on loan, with a view to a permanent move in the summer, while French defender David Sommeil returns to his homeland on a similar arrangement.
Kevin Keegan said: "We have been looking at him for two years, he is a big strong lad and I think the Premiership may well suit him.
"Marseille paid nearly £8m for him, which is a lot of money, but obviously the market has changed since then."
The deal was borkered by Willie McKay, who represents Sommeil. He told Sky Sports: "Kevin Keegan had asked me about van Buyten and he made a personal call to him to persuade him to come to Manchester City."
"This is an unbelievable deal for City as Newcastle were willing to pay €12m for him last January before they signed Jonathan Woodgate."
Van Buyten, 26 on February 7, became Belgium's most exensive player when he moved from Standard Liege in 2001. He appeared in each of his country's four games at the 2002 World Cup but has struggled with form this term.
McKay added: "Marseille president Christophe Bouchet was willing to do the deal as he is a big fan of David Sommeil. He remembers that Sommeil was voted the best defender in France when he was at Bordeaux.
"Sommeil is happy to be going back to France as he is more suited to the French style of football."