The South American is set to return to Spain with the Champions League new boys as La Rosaleda further strengthen their striking options.
The former Blackburn target man was surplus to requirements at the Etihad Stadium due to the team's extreme depth in his position, so a temporary move to the La Liga club sees both outfits satisfied.
Manuel Pellegrini had previously told the press that he was very close to signing his man, but stated that "nothing is official yet."
However, both club and player have confirmed the move.
"In the last [few] weeks there was interest from Malaga. I would have the chance to play [in] the UEFA Champions League and this was the reason I accepted the transfer," he told a Paraguayan radio station.
"This is the last year of my contract at Manchester City, and in December I would [have] been able to negotiate with other teams."
"But there is now a deal between both clubs, so I traveled to Malaga for medical tests, and then I will sign my contract."