Pep Guardiola's side splashed in the region of £45million for the England international as the club look to fill the void left by Fernandinho's departure at the end of last season.
Phillips, who spent his entire career at Leeds United, helped his boyhood club to Premier League promotion back in 2020 under the stewardship of Marcelo Bielsa.
The midfielder flourished under the Argentine and quickly forced himself into Gareth Southgate's England squad.
In his eight years at Leeds, Phillips made 234 appearances across all competitions and also chipped in with 14 goals.
Upon signing with the current league champions, the 26-year-old said: "I'm absolutely delighted to have joined Man City.
"City have proved again to be the best team in the country, with an amazing squad and a manager in Pep Guardiola who is rightly considered to be the finest in the world.
"To be able to play under Pep, learn from him and his coaching staff as well as being part of a fantastic squad is a prospect that I'm incredibly excited about.
"City are a world-class club with world-class staff and facilities. It's a dream come true to join."
Phillips broke into the England team in 2020 and has since made 23 appearances for the Three Lions.
The midfielder was voted England Men's Player of the Year in 2020/21 and featured prominently at Euro 2020 as Southgate's men reached the final before suffering a dramatic defeat to Italy at Wembley stadium.
Director of Football Txiki Begiristain added: "Kalvin is a player that we have long admired, and at both domestic and international level, he has proved his fantastic ability and quality over the past few seasons.
"His reading of the game, alongside his passing ability, energy and drive make him a formidable talent and he is a player who has a fantastic will to win.
"We feel he will be a superb addition to our squad and that he will complement our game perfectly.
"Everyone here is looking forward to watch Kalvin play and develop even further over the next few years."