The 25-year-old joins the Premier League champions on a six-year contract and will wear the newly vacant number 10 shirt from Sergio Aguero.
The fee exceeds the £89 million Manchester United paid to sign midfielder Paul Pogba from Juventus in 2016.
“City are the best team in the country with the best manager in the world,” said Grealish.
“It is a dream come true to be part of this club.”
This move makes Grealish the ninth most expensive footballer in history.
Jack Grealish can make his debut for Pep’s team. Guardiola in a community game Shield on Saturday against Leicester City at Wembley.
Grealish was a huge fan of Villa as a child. Joined the club at the age of 6 and made 213 appearances in all competitions, scoring 32 goals.
He said: “Obviously it’s been a tough couple of months because I’ve been a lifelong Aston Villa fan but when I speak to the manager here and you finally see what kind of players they have here. it is something I can’t deny
“Competing for big trophies is what I want to do. It’s something I can’t deny.