Seaman, 39, was out of contract at Arsenal, whose manager, Arsene Wenger, had asked him to stay on as a squad player and goalkeeping coach.
But the keeper, only recently dropped by England, wanted first team soccer. He has agreed terms with City on a one-year deal, premier league City said on their website on Wednesday.
Seaman told Arsenal's website: "I have given this move an enormous amount of thought and I honestly believe that the time is right for me to move on to a new challenge.
"I want at least one more season of guaranteed first team football in the Premiership and honestly feel I am as fit as I have ever been."
Seaman will replace another veteran keeper, Denmark's Peter Schmeichel, who retired at the end of last season.
"I am over the moon that David has signed for City. With his vast experience he could not be a better replacement in goal for Manchester City following Peter Schmeichel's retirement," chairman John Wardle said.
Seaman, who played his 1,000th club and international match last season, is two months older than Schmeichel.
His last game for Arsenal was last month's FA Cup final when Arsenal beat Southampton 1-0 with Seaman -- captain for the day -- making a fine save in the match's closing stages.
Seaman's move to Manchester does not only promise him regular action in the premier league but will also keep him in European competition limelight.
European soccer's governing body said this week that Manchester would play in the qualifying round of next season's UEFA Cup after England finished top of the UEFA Fair Play rankings last season.
Arsenal manager Wenger told the club's website: "I, like many of our supporters, did not want David to leave but of course, I respect his desire to play regular first-team football."
MOST EXPENSIVE
Seaman started his career as an apprentice with Leeds United and went on to play for Peterborough United, Birmingham City and Queen Park Rangers.
In 1990 he moved to George Graham's Arsenal for 1.3 million pounds ($2.12 million), making him the most expensive goalkeeper in British football at the time.
He won the league title in his first season at Highbury and went on to help Arsenal win the league and FA Cup double twice, in 1998 and 2002.
Arsenal's first million-pound player signed up having just broken into the England set-up. Bobby Robson gave him his England debut in 1988 against Saudi Arabia.
He has played 75 games for the national team but his 2001-2002 season ended in tears after fans blamed him for the 2002 World Cup quarter-final 2-1 defeat by Brazil when he allowed a free kick from Ronaldinho to drift over his head into the net.
More criticism followed last October after he conceded a goal direct from a corner in England's 2-2 draw with Macedonia in a Euro 2004 qualifier last October.
This year, he was left out of the England squad for three games including Tuesday's friendly win at Leicester over Serbia and Montenegro and it is thought that West Ham's David James is now regarded as the national team's number one.
