Mahrez joined Leicester from Le Havre in January 2014 and helped them to a first place finish in the Championship.
"I think we can be successful over the coming years and I believe my own game can develop under Pep's management".
The Algerian has not commenced pre-season training with the Foxes after being handed an extra vacation, and might not team up with his former team-mates at Leicester City again.
And Txiki Begiristain, City's director of football, says he is delighted to have finally captured one of the best players in the English top flight.
Mahrez's experience of winning the Premier League will certainly have left him hungry for more success, and he now has the chance to achieve that once more under the stewardship of Pep Guardiola. He will be welcomed back to King Power Stadium as both an opposition player and a friend of the Club.
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