The Premier League champions tabled a failed joint bid for the 26-year-old and Eliaquim Mangala in January, but the former now becomes their second summer signing for £12 million.
Manchester City have signed Porto midfielder Fernando for a fee of €15 million [£12m], the Portuguese club have confirmed.
The 26-year-old and right-back Bacary Sagna were top of Manuel Pellegrini's transfer wishlist for the summer.
Sagna's move on a free transfer was confirmed earlier this month, which Fernando becoming the champions' second close-season recruit.
City tabled a joint bid for Fernando and team-mate Eliaquim Mangala in January, though the deal could not be completed before the transfer deadline - with the former then signing a new contract with Porto.
Confirmation of the deal was initial held up due to complications, with Fernando's agent, Antonio Araujo, confident the move would happen last month.
He toldMaisfutebol: "Fernando is in the city of Porto waiting for Porto tell him their decision about the documents they have received so that he can travel immediately [to Manchester]."
Fernando, who was denied the opportunity to represent Portugal, has been targeted by City for his midfield anchorman qualities and will compete with the likes of Fernandinho and Yaya Toure for a starting berth.
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