The 26-year-old was a standout for Everton last season, scoring six goals and providing three assists in his 34 games.
On Friday night it looked like Ndiaye was on his way to Tottenham after the North London club agreed a deal with David Moyes’ side.
That deal depended on Richarlison heading the other way, however, but the Brazilian was unable to agree personal terms with his former club.
Man City swooped in and have now confirmed the signing in a deal worth up to £65 million.
It’s understood the deadline day move for the Senegal international consists of £60m plus a further £5m in add-ons.
Ndiaye has signed a five-year contract which will keep him at the Etihad Stadium until 2031.
Speaking to Man City’s website, Ndiaye said: "I’ve worked my whole life for an opportunity like this.
"City are one of the best clubs in the world and I’ve seen them win everything as I’ve grown up.
"To be able to write my own chapter in a story that special is the chance of a lifetime and I’m determined to grab it with both hands.
"It’s not always been easy in my career, but I always had the belief that I could play for a team challenging for the biggest prizes and now I’m here. It feels so good.
"I love to play with the ball on the floor in an attacking team that wants to score as many goals as possible. That’s why I know this is the perfect fit.
"City fans can rest assured that I will give my all to bring more success to this incredible club."