City must face Europa League holders FC Porto in the round of 32 after the Portuguese champions came out of the hat first in Switzerland.
The mouth-watering clash of the Premier League leaders and FA Cup holders with Portugal's Treble winners in the New Year lit up the draw in Nyon.
Andre Villas-Boas, now in charge at Chelsea, guided Porto to a 1-0 victory over Braga in last season's final in Dublin as the club completed its second treble in an outstanding campaign.
Chief Football Administrator Brian Marwood, at the draw, said: "It's amazing - we've just played in one of the hardest groups in the Champions League and now we've got the Europa League holders.
"It's a big game against attractive opposition and one we'll obviously take very seriously. We're extremely positive about the competition and we're excited about being in it."
The ties are provisionally set for 16 and 23 February, with City away in the first leg. Marwood added: "We'll be going into the New Year still in four competitions and trying to build on winning the FA Cup last season."
Jose Mourinho's old club can boast a formidable record in Europe, with two Champions League victories and a UEFA Cup triumph on the honours board.
Porto first lifted the Champions League trophy in 1987, when they beat Bayern Munich in the final
The Portuguese outfit's second success, in 2004, will be more familiar to City fans. Mourinho's side knocked out Manchester United as well as Real Madrid before a 3-0 final win over Monaco.
Mourinho's team had already made their mark the previous season by winning the UEFA Cup - forerunner of the Europa League - after beating Celtic in the Seville final.
The current Porto side includes Brazilian striker Hulk, who has been linked in the past with a move to Premier League clubs including City. The second leg of the forthcoming tie will be the second time a Porto side has faced City in Manchester - they lifted the pre-season Thomas Cook trophy with a 1-0 win here in August 2006.
Should City prevail, they will face either Legia Warsaw - the Polish club from where Kazimeirz Deyna was signed - or another Portuguese giant, Sporting Lisbon.
The draw also paired Stoke with Valencia and Manchester United with Ajax.