After joining Forest from Newcastle United in 2024 for £35m, Anderson became an integral player as the club finished seventh in the Premier League and qualified for Europe for the first time in 30 years.
Last season, Anderson helped Forest to the Europa League semi-finals and was the Premier League leader for touches and duels won.
He also became a key feature of Thomas Tuchel’s England side, featuring in every game at the World Cup.
City agreed to pay a club record fee for Anderson, exceeding the £100m spent on Jack Grealish in 2021, and fended off competition from Manchester United.
Talks around Anderson’s future were ongoing during the World Cup and an agreement was reached between Forest and City on the eve of England’s Group L game against Panama.
He will join a team led by former Chelsea head coach Enzo Maresca, who arrived in June after Pep Guardiola stepped down as City manager after 10 years in charge.
“They’re winners, they’re relentless, and that’s the sort of team I want to be a part of – champions and people who win trophies,” Anderson said.
“Over the last 10, 12 years, they’ve dominated, so that’s why I wanted to join.”
City director of football Hugo Viana described Anderson as “one of the outstanding young midfield talents in the world”.
“He offers energy, outstanding work rate and an exceptional range of passing. His improvement in recent years has been really impressive and underlines his desire to be the best player he can be,” Viana said.
“At just 23, there is plenty of opportunity for development over the coming years and we feel he can become a complete midfielder.”