The 21-year-old Norwegian forward joins the Premier League leaders after a release clause in his contract was triggered, reportedly for £51 million rather than the £63 million earlier reported.
"Manchester City can confirm that we have achieved an agreement in principle with Borussia Dortmund for the transfer of striker Erling Haaland to the Club on July 1, 2022," the club said in a statement.
"The transfer is contingent on the Club and the player agreeing to terms."
It brings an end to years of uncertainty about Haaland's future, with City beating off competition from some of Europe's biggest clubs to land perhaps the most exciting young talent on the planet.
After joining Dortmund in 2020, the former Molde and RB Salzburg striker scored 85 goals in 88 games across all competitions.
In that transfer window, Manchester United attempted but failed to sign Haaland, who has also been connected with Chelsea, Real Madrid, and Barcelona in recent years.
After failing to recruit Tottenham striker Harry Kane last summer, City has been without a recognized center-forward for the whole of the 2021/22 season.
Nonetheless, Pep Guardiola's side is the best scorers in the Premier League this season, and they have a tiny lead over Liverpool in the title fight.
The Champions League remains elusive for City following their semi-final loss to Real Madrid – and Haaland's record in the competition is poor.
Ally McCoist, the legendary Rangers striker, feels the £63 million deal is a "steal" and expects Haaland to make City "double unstoppable."
"He's one of the best center-forwards in the world," the former Golden Shoe winner told talkSPORT. "I can only see him growing better."
"I can't believe what I'm about to say, coming from someone who can recall the first £100,000 transfer and Trevor Francis, the first £1 million deal."
"I'm about to say something fantastic about it. His additional pay will make it a monster contract.
"However, £63 million is probably half, if not more, of what you would normally pay."
"By stating City could be getting a bargain, I am categorically stunning myself."
"He may potentially be the final piece in that puzzle," McCoist continued.
If they can persuade him to fire, they could be unbeatable twice over." They're terrific, easy to watch, and the 'false no. 9' has helped them score a lot of goals.
"However, if you have the most exciting center-forward in the world in terms of potential, that will make a difference."
"Haaland's potential, power, and strength will transform City into a considerably superior squad."
"We know they want the Champions League; it was heartbreaking in Madrid, but can anyone stop them if they have Haaland?"
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