City have been strongly linked with the Serbia international for a number of weeks but have now confirmed that a work permit has been granted for Kolarov and that the player has passed a medical. He has signed a five-year contract at Eastlands.
Juventus made a late attempt to recruit Kolarov, 24, but Roberto Mancini has secured the signature of the player who joined Lazio from OFK Belgrade in the summer of 2007.
"I first saw Kolarov in his Lazio debut back in 2007," Mancini told the club's official website before confirmation of the deal. "He was composed on the ball had an excellent delivery with his left foot and was technically very able.
"I have watched him a lot since then and so have the Manchester City scouts. His attacking capability is very good. He is fast and can shoot with power and accuracy.
"He also has the ability to play in numerous positions and is very good in midfield. This is an additional benefit to the team. He has a fantastic international career ahead of him. I am looking forward to working with him."
However, Mancini is adamant that Kolarov's arrival will not spell the end of Wayne Bridge's career at Manchester City. The Italian said after a 2-0 defeat to Sporting Lisbon in New York: "I want two top class players for each position."
Kolarov is the fifth big-money signing for City this summer following the arrivals of Jerome Boateng, David Silva and Yaya Toure.
wayne bridge making way?
Hard-hitting: City new boy Kolarov unleashes a typically powerful shot
http://www.youtube.com/watch?v=dsDznEvS4yI&feature=player_embedded
Manchester City's £17million new signing Aleksandar Kolarov has a reputation for his thunderous shots - just ask an Italian referee and his former Lazio team-mates.
Referee Massimiliano Saccani was knocked out for several minutes in February 2009 by one of the player's strikes during a match against Torino.
Nine months later it was the turn of Ezequiel Lavazzi of Napoli, who also suffered the same fate.
During a Lazio training session, Kolarov managed to break three fingers of team-mate Sebastiano Siviglia after unleashing another power drive. Because of his powerful strike, his nickname at Lazio was Roberto Carlos.
Kolarov, who plays on the left-hand side of midfield, scored six goals in 82 appearances for Rome's second club.
Although no-one is disputing his skill, there has been surprise at just how much Manchester City have paid for him especially as his strike rate hardly lit up Serie A.
Last December, former Inter boss Jose Mourinho had offered £7m for him and it is hard to see how his price has more than doubled in just seven months.
Lazio fans' forums spoke of their surprise at the figure City had paid but wished Kolarov well, adding that they hoped the windfall would be spent on quality players.
Like everyone who scores against Roma in the cross-city derby, he is a darling for the Ultras.
Super Mario: Balottelli looks set to play in the Premier League next season
Mario Balotelli is on the brink of joining Manchester City from Inter Milan for an initial £24million.
The 19-year-old has told friends he is joining City and has agreed terms on a £65,000 a week five-year contract, according to reports in Italy. The transfer fee could eventually rise to £29m with add-ons.
The capture would take City's incredibly summer spending spree to about £100m following the acquisitions of Jerome Boateng (Hamburg, £10m), David Silva (Valencia, £24m), Yaya Toure (Barcelona, £24m) and Aleksandar Kolarov (Lazio, £17m).
Balotelli had also interested Manchester United and Chelsea, but the lure of City and their spending power appears to have been impossible to resist.
The move will reunite the erratic teenager with Roberto Mancini, the former Inter manager who handed Balotelli his debut at the San Siro in 2007.
Despite their vast wealth, City are keen to show they aren't a soft touch and reports in Italy suggest United were actually prepared to offer Balotelli a better financial package.
Mancini told Italian newspaper La Stampa: 'There is money to sign everyone, but not to pay them a lot, as some people are saying.
In training: Balotelli trains with Inter Milan earlier this month
'He (Balotelli) is one of the four or five strikers that interest us. I was the first to believe in him and I'm convinced about what he can do.
'Mario has two qualities that suit us, his talent and his age, because I want people able to build a cycle at Manchester City.'
Mino Raiola, the player's agent, insists that nothing has yet been signed, but respected Milan paper Gazzetta dello Sport reports that everything is agreed in principle and claims Balotelli even held a farewell party with friends.
Sportsmail understands an announcement is unlikely before Wednesday.
Mancini's men: Milner (left) could be next for City, while Kolarov has signed
Balotelli has flown out to America for his club's pre-season tour and, if a deal is formally wrapped up in the coming days, he could line up for City against Inter in Baltimore on Saturday.
Mancini also raised the prospect at the weekend of a move for Liverpool striker Fernando Torres, but Sportsmail understands that a raid for the Spain World Cup winner is unlikely until next summer.
James Milner is a bigger priority, with City hoping to clinch a £24m deal for the 24-year-old Aston Villa midfielder.