Roberto Mancini's side was shorn of the likes of Emmanuel Adebayor, Shaun Wright-Phillips, Gareth Barry, Yaya Toure and Kolo Toure, and had no answer as two first-half goals by Yannick Djalo sealed victory for the Portuguese outfit.
City's second game in the Barclays New York Challenge is against host side the Red Bulls on Sunday.
City: Hart, Richards, Kompany, Lescott (Onuoha 46mins), Cunningham (Bridge 45); Ireland (Boyata 64), Vieira (Tchuimeni-Nimely 64), Zabaleta, A.Johnson, Jo (Tutte 74), Bellamy (Guidetti 74). Subs not used: Taylor.
Lisbon: Ferreira, Carrico, Polga, Fabiano, Mendes (Santos 87), Ribeiro, Saleiro, Djalo, Postiga (Veloso 79), Pereira, Vukcevic (Valdes 74). Subs: Patricio, Sinama-Pongolle, Liedson, Coelho.
Source: PA
Source: PA