The 32-year-old stopper only moved to the Vicente Calderon earlier this summer, but has been summoned to the Etihad Stadium as defensive cover by former boss Manuel Pellegrini
Goal reported on Tuesday that City had agreed a £4 million deal with Atleti for the former Argentina centre-back, while Manuel Pellegrini admitted on Saturday that he expected "progress" on the deal over the weekend.
|15/8||Manchester City are 15/8 wth bet365 to win the Premier League
"I am delighted to have joined City because I am still hungry for success and want to improve," Demichelis told the club's official website.
"I have been in Europe for 11 years now and this was a great chance for me to play in the Premier League with such a big club.
"When there is a change, there is always a process. There’s always a period of adjustment you have to go through. Moving from South America to Europe is a big change and you need some time to settle in because everything is new.
"But in my case, I have lived in Europe for many years and I don’t think there’ll be any problems in adjusting to life here. Now I want to repay the manager's faith in me out on the pitch. I can't wait to get started."City moved to sign the Argentine following injury to Vincent Kompany, though Matija Nastasic returned from the sidelines for Saturday's 2-0 victory over Hull City Tigers.