The Argentine shot stopper, 32, reunites with City boss Manuel Pellegrini having worked together at Malaga, and follows Bacary Sagna and Fernando to the Premier League Champions. City have paid a £6m fee to land the former Elche goalkeeper, who was inexplicably left out of Argentina's World Cup squad by manager Alejandro Sabella.
Questions will obviously be raised over what this means for Joe Hart's future given how impressive Caballero has been in Spain, and the experienced goalkeeper says he has come to the Etihad Stadium to push Hart for the No. 1 jersey next season.
"I am very happy, and really looking forward to the start of pre-season and performing well to help the team. This is a new challenge and a new league for me. I have been doing well in the previous years and my goal is to go on and hopefully perform at the same level for City," he said.
"I know I am coming to a big club with a very good goalkeeper. City already have a great goalkeeper in Joe Hart, but I will try and compete for the no.1 spot. I will do my best in the training sessions," added Caballero.
City fans reacted well to the signing on Twitter, and particularly to the bizarre choice of hashtag from the club - #WelcomeWilly - but the less said about that, the better. Here are some of the tweets from City fans who are reacting to Caballero's arrival today.
Another class signing this summer on the cheap, headline writers must be rubbing their hands with glee #WelcomeWilly— Tom Pugh (@tompugh90) July 8, 2014
#WelcomeWilly Will provide serious competition for Joe and push him to be at his very best all the time.— MCFC Iowa (@MCFC_Iowa) July 8, 2014
What do you think of City's latest signing, Willy Caballero?