After having two bids rejected, City agreed a fee with the Merseyside club over the weekend.
Lescott, 27, passed a medical on Monday and finally tied up the transfer to Eastlands late on Tuesday night.
"I am absolutely delighted to welcome Joleon to Manchester City. He is an England international who has proved his Premier League ability during his time at Everton," City manager Mark Hughes told the club's website.
"In bringing Joleon to the Club I feel we have recruited a defender of the very highest quality.
"He can play in a number of defensive positions, and I'm positive he will make a significant impact for us."
Lescott is City's sixth major signing of the summer, joining Gareth Barry, Roque Santa Cruz, Carlos Tevez, Emmanuel Adebayor and Kolo Toure at Eastlands.
The former Wolves defender said: "I'm over the moon to get the move completed, and I'm looking forward to training with the lads as I've not trained for a few days.
"I know some of the lads already - I'm close friends with Shaun (Wright-Phillips), we've played against each other since we were 16 or 17.
"The way this club is moving on, I'm really looking forward to being a part of that."
