The club said in a statement the club's home at Eastlands would now be renamed the Etihad Stadium with immediate effect, one of several commercial deals agreed between the club and the Abu Dhabi-based carrier.
"We are delighted to be expanding our relationship with Etihad Airways through this comprehensive partnership agreement," City chief executive Garry Cook said.
"Most importantly, in addition to delivering significant revenue at a key stage in the club's evolution, the agreement creates exciting opportunities for our two organisations to co-operate more deeply commercially and on media and community initiatives in the future."
No figures for the agreement were released but British press reports said the deal could be worth up to £100 million.
The deal was announced shortly before City took off for their pre-season training camp and summer tour of the United States.
The deal also encompasses an extension to Etihad's existing shirt sponsorship as well as redevelopment of the site surrounding City's stadium, which will be enlarged and named the Etihad Campus.
"This is a game-changing partnership agreement that redefines the traditional sports sponsorship paradigm," Etihad Airways chief executive James Hogan said.
"It is a once-in-a-lifetime opportunity for two iconic brands that share the same vision to promote far-reaching global awareness and business growth."
Etihad Airways also announced the launch of twice daily flights between Manchester and Abu Dhabi starting from August 1.