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The clubs have agreed a transfer fee of £77.6m (€90m).
The deal would not be a record deal for a defender with Harry Maguire costing Manchester United £80m in 2019.
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Factoring in exchange rate changes and inflation, the deal is costing City just a few million more than the £75m paid by Liverpool for Virgil van Dijk.
Gvardiol is a left-footed Croatia international centre-back, widely regarded as one of the top centre-backs in Europe,
The 21-year-old has been coveted by a number of top clubs, insluding Chelsea and Tottenham, who both wanted to sign him last year.
Charting rise of Leipzig defender Gvardiol
From a goal-scoring demonstration of his talents, to a humbling at the Etihad, Josko Gvardiol's two run-ins with Manchester City in the Champions League last season couldn't have been more different
In the first leg of their last-16 tie, the man in the mask for Croatia at the World Cup, showed why, at just 21, he is one of the world's highest-rated young defenders and coveted by Europe's top clubs. His mature defensive display was capped by a towering header to equalise for the German club.
Three weeks later, RB Leipzig were thrashed 7-0 in Manchester, with no answer to the powers of five-goal Erling Haaland. It was a chastening experience for Gvardiol. But perhaps one which will add to his drive to reach the very top of the game.
It certainly doesn't seem to have diminished his standing in the eyes of his suitors.
Man City's pre-season fixtures and results
- July 23: Yokohama F Marinos 3-5 Man City
- July 26: Bayern Munich 1-2 Man City
- July 30: Atletico Madrid 2-1 Man City
- August 6: Arsenal vs Man City - kick-off 4pm (Wembley) FA Community Shield
Follow the summer transfer window with Sky Sports
Who will be on the move this summer when the transfer window opens on June 14 and closes at 11pm on September 1 in England and midnight in Scotland?
Keep up to date with all the latest transfer news and rumours in our dedicated Transfer Centre blog on Sky Sports' digital platforms. You can also catch up with the ins, outs and analysis on Sky Sports News.