Los Che have received an initial £21m, with the potential to earn £11m in add-ons.
The 20-year-old winger has signed a five-year contract at the Etihad Stadium.
"Pep encourages a really open, aggressive style, which I love, and he is a manager with a proven track record of improving players. To have him overseeing my development is a dream.
"City have won plenty of trophies in the last 10 years and I hope I can play a role in continuing that success."
Here we go! We're delighted to announce the signing of @FerranTorres20 from Valencia on a five-year deal ✍️
#ManCity | https://t.co/axa0klD5repic.twitter.com/hzCbdoRsxL
— Manchester City (@ManCity) August 4, 2020