Pellegrini succeeds the sacked Roberto Mancini, and he will begin his three-year deal with the club on June 24, according to the club's announcement.
"I am delighted to accept this hugely exciting opportunity, said Pellegrini, who guided Malaga to the quarterfinals of the UEFA Champions League this past season and previously guided Villarreal to the Champions League semifinals. "The club has a clear vision for success both on and off the pitch and I am committed to making a significant contribution.
"Everything is in place for Manchester City to continue to be successful and I am excited to be able to work with such a talented squad, the executive team and the board to deliver for fans who are renowned for their steadfast support."
Added City chairman Khaldoon Al Mubarak: "Manuel is a hugely experienced and successful manager with a proven track record."
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