City have resurrected the move for Iheanacho and agreed terms after a dispute between his parents and the club arose over bonus payments threatened to collapse a deal last month.
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The 17-year-old, who won the Golden Ball at the Under-17 World Cup in the United Arab Emirates last autumn, is currently on holiday in Barcelona and will return to Nigeria before moving to Manchester when he turns 18 in 10 months’ time.
“The situation is that Kelechi hasn’t turned 18 yet and until he does, he can’t sign but what he has done is sign a pre-contract with Manchester City pending his 18th birthday,” Iheanacho’s father James told brilafm.net at the Confederation of African Football's gala award ceremony in Lagos.
Goal revealed last week that a £250,000 transfer fee has been agreed for Iheanacho, with a further £300,000 being paid to the Taye Academy in Owerri and £350,000 to the youngster’s father.
City have invested heavily in top youth talent over the last 12 months, with Swede Zacharias Faour, Norwegian goalkeeper Kjetil Haug, Real Madrid superstar Jose Pozo and Malaga's Brahim Abdelkader all having joined the club.
Iheanacho's 17-year-old compatriot, Chidi Nwakali is also expected to sign imminently after arriving at the club for talks last week.
The influx of young talents at City comes ahead of the club opening their state-of-the-art Etihad Campus training facility in August, which will house City’s youth set-up alongside their Platt Lane complex in Fallowfield.