The 32-year-old has signed a two-year contract with City.
Demichelis has played under City boss Manuel Pellegrini both at River Plate an Malaga.
“I am delighted to have joined City because I am still hungry for success and want to improve,” said Demichelis.
“I have been in Europe for 11 years now and this was a great chance for me to play in the Premier League with such a big club.
“When there is a change, there is always a process. There’s always a period of adjustment you have to go through. Moving from South America to Europe is a big change and you need some time to settle in because everything is new.
“But in my case, I have lived in Europe for many years and I don’t think there’ll be any problems in adjusting to life here. Now I want to repay the manager’s faith in me out on the pitch. I can’t wait to get started.”
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