Jovetic spent five seasons in Serie A after joining from Partisan Belgrade and becomes City's second signing on Friday, after fellow forward Alvaro Negredo joined from Sevilla.
The 23-year-old scored 40 goals in 134 appearances for the Florence-based side and will add further options in attack for new City manager Manuel Pellegrini.
The duo will now challenge Edin Dzeko and Sergio Aguero for a place in new manager Manuel Pellegrini's side.
"Manchester City are delighted to announce the signing of Stevan Jovetic from Fiorentina," read a statement on the club's official website.
"The 23-year-old Montenegro international will now join up with his new team-mates over the weekend."
Jovetic will wear the No 35 shirt for the new season, with Negredo taking the vacant No 9 jersey.