Ederson had long been linked to the Premier League side, having impressed at Benfica in just his first full season as a regular starter.
Goal reported at the start of the month that Ederson's move had been completed, with the former Sao Paulo player signing a six-year contract to become City's second signing of the summer.
And City announced that the deal is official on Thursday, with Ederson revealing his excitement at making a dream club true.
“I like everything about Manchester City," he told their website. "This is a great club, the league they have here in England and they have amazing fans and they play splendid football. I have always had the dream to play in English football and now I'm going to make it true.
“With Pep Guardiola, City are growing more and more. He is putting in place a young team for the future. Those were important factors in making my decision.
“Manchester City has an amazing squad. I think they managed to have a good season. Next season, we will have to be focused to achieve the goal of winning trophies.”
Meanwhile, director of football Txiki Begiristain said City have signed one of the best in his position.
“We are delighted to bring Ederson to Manchester City. He is one of the best young goalkeepers in the Europe and he is an important addition to the squad for next season and the coming seasons," he said.
“He is young, has all the qualities you could want as a top-class goalkeeper and I think he’ll fit in really well to our squad.”