Toure’s ice-cool penalty put City ahead before substitute Kelechi heanacho was in the right place at the right time to convert David Silva’s cross. Curtis Davies' late own-goal added gloss to the result - the Blues' third successive Premier League win.
City dominated possession from the off but found the massed ranks of Hull’s defence difficult to break down.
The going was as stodgy as a Christmas pudding early on, but Toure was the stand-out performer, collecting and controlling possession from the base of City’s midfield.
He had the first shot on target after his free-kick was tipped over by David Marshall before City’s momentum was upset by what looked like a knee injury to John Stones.
Aleks Kolarov replaced him, and before long City’s grip on the match began to tighten again, with David Silva and Nolito working Marshall with shots from distance.
After the break the game finally began to open up, but it was Hull if anyone who began to threaten more.
Defender Harry Maguire hooked one ambitious volley over, while striker Dieumerci Mbokani was proving a handful for City’s defence.
Kevin De Bruyne hit the post with one whipped shot, Bacary Sagna cleared expertly off the line from a Michael Dawson header and then, finally, the goal came.
Raheem Sterling won the penalty by driving across the Hull box and after Andrew Robertson lunged in on him, Toure slammed the resulting penalty kick home.
City have struggled from the spot on occasions this season – the Blues missed two in a game against Everton – but Toure smashed home without a hint of worry.
Toure clearly likes Boxing Day – he has scored on it in each of the last three seasons, and it was a perfect 10 out of 10 in Premier League penalties for him.
It was soon two, with Iheanacho timing his run perfectly to tap in Silva’s cross, with Davie's late own-goal completing the scoring.
Star man – Yaya Toure
City’s stars struggled to hit top form at times, but Toure was metronomic in his passing and positioning all evening. He was often the man picking up possession from the defence, linking play and probing forward when possible. And when it came to the penalty he was the coolest person in the stadium.
Stones picked up an early injury to his right knee and was replaced by Aleks Kolarov.
City started with De Bruyne through the middle in the most advanced role, with Nolito wide left and Sterling on the right. After the break Nolito played centrally with De Bruyne on the left, until Iheanacho replaced the Spaniard.
Fernandinho returned from suspension to make his 100th Premier League start for City. Leroy Sane and Fabian Delph are not fully fit so missed out. Sergio Aguero is in line for a return against Liverpool after suspension.
What it means?
City go into second in the Premier League, seven points behind Chelsea and two ahead of Liverpool and Arsenal. Liverpool play Stoke City on 27 December.
City face a tough trip to Liverpool on New Year’s Eve (5.30pm GMT), before the home clash with Burnley on 2 January (3pm).