A goal from David Silva and second-half braces from Argentine pair Sergio Aguero and Carlos Tevez allowed City to go a point ahead of neighbours Manchester United who are still to play Norwich City today.
It all began late in the first half when Silva was on hand to tuck home from close range after Tevez's bobbled effort found its way across the area in what was an unconvincing opener.
Nevertheless, Roberto Mancini's men had the lead prior to the break and that boded well for the second half as Aguero and Tevez began to run riot.
The one-goal advantage was doubled less than ten minutes into the second term when referee Jon Moss awarded a penalty which none of the Villa players accepted as they were unsure why it was paid. Replays showed there may have been a handball against Andreas Weimann but nonetheless, it had been awarded, and Aguero stepped up to send the spot-kick home.
Soon enough it was 3-0 to City when Tevez also converted from the penalty spot after Barry Bannan handled the ball in the area before Aguero grabbed his second in the 67th minute with an angled finish after bearing down on Brad Guzan's goal.
The rout was complete just over 15 minutes from time when Samir Nasri slid the ball across the box for Tevez to tap home, sending City to the summit.
The loss was Villa's fourth in their past six outings and saw them drop into the bottom three, after Reading managed to beat Everton at home, making it a tough start to life at Villa Park for Paul Lambert.
Etihad Stadium, Manchester - 47,072
Yellow cards:MC - nil AV - Barry Bannan 56'