The 19-year-old, who is currently with the Brazil squad at the Rio Olympics, will make the move to City in January on a contract that runs until the end of the 2020-21 season.
The deal - for a reported £27million - sees the Blues continue their considerable recruitment drive under new boss Pep Guardiola, with the news coming a day on from them wrapping up the £37million signing of 20-year-old Germany winger Leroy Sane from Schalke.
Jesus said in a club statement on Wednesday: "Manchester City is one of the best clubs in the world so I'm really pleased to sign.
"We have many great talents in the team and a fantastic manager in Pep Guardiola that I can learn so much from.
"I'm looking forward to showing the City fans what I can do and I think we'll have a great future together!"
City reportedly beat off competition from Barcelona to secure Jesus' services and the statement said there had been "strong interest from some of the biggest clubs in the world."
City director of football Txiki Begiristain said: "We are delighted that Gabriel has chosen to join us.
"He is one of the most exciting young prospects in world football and plays the game in a spectacular way
We look forward to him making a big impact at Manchester City in January."
Source : PA
Source: PA