From next season the right sleeve of City's matchday shirt -- a prime piece of advertising real estate -- will carry the name of Nexen Tire, a South Korean firm that is already one of the club's commercial partners.
The deal will mean one of the Premier League's own logos will be removed, although it will remain on the left sleeve with another on the back of the shirt.
City, owned by Sheikh Mansour who is a member of Abu Dhabi's ruling family, never disclose the value of sponsorship deals although the tie-up with main shirt and stadium sponsor Etihad, agreed in 2011, is thought to be worth 400 million pounds ($495 million) over 10 years.
The Premier League's decision to free up advertising space on club shirts means England's top-tier clubs can look forward to even greater riches on top of their share of the eye-watering 5.1 billion pounds domestic TV deal that kicked in this season.
That deal guarantees top flight clubs around 80 million pounds per season, not including overseas TV rights.
City chief executive Ferran Soriano said the deal was part of the club's forward-thinking approach.
"At Manchester City, we are always striving to take an original approach to our commercial partnerships, creating great relationships and great content for our fans," he said in a statement.
The Premier League ended a title-sponsor deal with Barclays last year -- freeing up a 100mm square patch of cloth that club commercial directors will be keen to sell to the highest bidder.
It could pave the way for a flurry of new sponsors clamouring to have their logos on sleeves next season -- although main shirt sponsors who fork out millions of pounds each season may be less keen to share the spotlight.
($1 = 0.8080 pounds)
(Reporting by Martyn Herman; Editing by Toby Davis)
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