Nunes arrives as a midfield reinforcement with Kevin De Bruyne ruled out for up to six months with a hamstring injury. He is City's fourth signing of the transfer window, following Mateo Kovacic, Josko Gvardiol and Jérémy Doku..
"I'm very happy of course to be here," Nunes said. "It's a dream come true. I've always wanted to play for a big club in England and this year God blessed me with that. I'm very happy and very excited -- I can't wait to get started."
City chased a number of option to bolster their midfield this summer, including West Ham's Lucas Paquetá, but landed upon Nunes, who impressed in his debut season in the Premier League after arriving at Wolves last summer from Sporting CP.
Nunes, who was born in Brazil, has 11 international caps for Portugal and represented the country at the 2022 World Cup in Qatar.