The Under-17 World Cup star will complete full terms with the Premier League side when he turns 18 in October
The Premier League outfit 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.
The teenager, 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.
“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 (€300,000) transfer fee has been agreed for Iheanacho, with a further £300,000 (€360,000) being paid to the Taye Academy in Owerri and £350,000 (€420,000) 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 starlet 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.