Roberto Mancini fielded a youthful side, but the likes of Joe Hart, Wayne Bridge, Stephen Ireland and Emmanuel Adebayor all started against a side rejuvenated by the arrival of former Arsenal star Thierry Henry.
Henry started for the hosts but was unable to find the net, however that mattered little as his team earned a deserved victory.
City had the first opening of the match when Jo smacked a shot straight at in-form Bulls keeper Bouna Coundoul from close range, and the Brazilian paid the price for his miss as his team fell behind moments later.
Bridge was undone down the City left by the pace of Dane Richards, whose driven cross allowed Macoumba Kandji to slide the ball past Hart from a few yards out.
Adebayor looked to level the match when he tested Coundoul with a stinging drive, but the keeper was equal to the shot and pulled off a smart save.
Jo atoned for his earlier miss by netting the equaliser on 55 minutes after good work from substitute Greg Cunningham allowed the striker an easy tap-in.
But the Americans claimed victory when Richards went from provider to scorer when he smashed home a stunning 25-yard drive that cannoned in off the crossbar.
City finish bottom of the Challenge group after suffering defeat to Sporting Lisbon earlier in the tournament, which also included Premier League rivals Tottenham.