The deal, which comes to £50m including £5m added, could make him the most expensive English player ever.
"I am thrilled to be signing for City and can't wait to get started," said Walker. "Pep Guardiola is one of the most respected managers in the world."
Kyle Walker is expected to wear no 2 Jersey at city.
The England international selected in the 2016-17 Premier League team of the year, is City's third signing of the summer, after the arrivals of midfielder Bernardo Silva and goalkeeper Ederson Moraes.
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