Mahrez was given extra time off by the Foxes after playing in Algeria's worldwide games in June and had been set to return to pre-season training before confirmation of his move to City.
Mahrez was named PFA Player of the Year in 2015-16 when Leicester were crowned Premier League champions, with him scoring 42 goals in 158 appearances across all competitions during his time at the King Power Stadium.
City are likely to spend more money before now and the transfer window closing on August 9.
The 27-year-old has signed a five-year contract will wear the No 26 shirt. However, Leicester held out for £95m and City chiefs pulled the plug on the deal at the last hour. "He beats defenders and creates space", City director of football Txiki Begiristain said.
Leicester City winger Riyad Mahrez undergoes Manchester City medical
The 27-year-old Algerian is the Blues' first signing since they won the Premier League title. City's director of football Txiki Begiristain added: "Riyad is a hugely talented player".
'Watching them from afar has been a pleasure.
Since Mahrez made his Premier League debut in 2014, only eight players - Eden Hazard, Diego Costa, Eriksen, Jamie Vardy, Alexis Sanchez, Romelu Lukaku, Sergio Aguero and Harry Kane - have been involved in more goals.
"I am so pleased to have joined City, a side playing great football under Pep Guardiola", Mahrez said in a club statement. "We're sure he will bring additional attacking quality to our squad".
Mahrez becomes Pep Guardiola's first major signing of the summer following a season in which the Citizens broke several records en route to the Premier League title.
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