The 16 year-old fullback joins City as a free agent after being offered superior terms by the English giants.
Larios was snapped up by Barca in 2016 from Sevilla and his departure to City has been known for several months.
Barca academy chief Patrick Kluivert said, "It is always a very great shame that a youth squad member leaves you. But if they don't want to be at Barça, that's it, what can we do if they don't want to stay?"
At Barca, Larios has been likened to Spain international left-back Jordi Alba.
He follows Eric Garcia, Adrià Bernabé and Pablo Moreno in leaving La Masia for the Etihad Campus.