In what was a pulsating Etihad encounter, Kylian Mbappe had fired the visitors into a 49th minute lead against the run of play.
But roared on by a passionate crowd, Sterling struck to level affairs on 63 minutes before substitute Jesus rounded off a memorable night by converting from close range 14 minutes from time to seal the deal.
It was an eagerly anticipated match-up between two of Europe’s most gifted and exciting sides – and the action didn’t disappoint.
The game began at a breakneck speed with Oleks Zinchenko deployed in midfield for Pep Guardiola’s side and it was City who almost made the early breakthrough.
Even then the danger wasn’t averted and Mahrez’s powerful follow-up shot rifled into the side netting.
Not surprisingly at the other end, the French side’s superstar attacking trident of Kylian Mbappe, Neymar and Lionel Messi sought to probe and harry the hosts at every opportunity but it was City on the front foot.
Mahrez was a key attacking outlet down the right channel and a quite brilliant, sweeping City move on 18 minutes instigated by the Algerian almost broke the deadlock.
A low 27th minute effort from Nuno Mendes forced Ederson into his first meaningful save and was a reminder of the threat posed by Mauricio Pochettino’s side.
But City carved open another excellent opportunity almost immediately, Marquinhos’ lunge blocking a close range Zinchenko shot after fine work by Sterling down the left flank.
City were knocking on the Paris door with almost relentless pressure and we came the closest yet to a deserved breakthrough on 33 minutes as skipper Ilkay Gundogan smacked the outside of the post after Mendes had diverted Cancelo’s cross invitingly into the German’s path 10 yards out.
However just before the break there was a huge let-off for City.
After Neymar had wrestled possession midway in our half, the Brazilian’s slide rule pass put Mbappe clear in space behind Kyle Walker on the left edge of the City box but, fortunately, the striker’s curling effort was high and wide, to the Etihad’s collective relief.
There was a nagging fear however that City could regret not converting that pressure – and four minutes after the restart PSG clicked into gear with a devastating smash and grab raid.
A breakneck attack featuring Neymar, Messi, Mendes and Herrera culminated with a low Messi deflected drive that found Mbappe unmarked at the far post.
This time he made no mistake, cutting inside before firing beyond Ederson to put the visitors ahead.
It was a cruel body blow but with the Etiahd roaring them on, City kept searching for that elusive goal and only a fine 62nd minute Navas block prevented Mahrez claiming the goal his display merited.
Finally however we were rewarded on 63 minutes through Raheem Sterling.
With our tails up, we poured forward in search of a second and Navas was at full stretch to tip away a 70th minute Jesus snapshot.
However, there was another big let off at the other end when Neymar skipped through the City backline after a neat one-two but then dragged his shot wide.
And we made the PSG pay for that error on 77 miniutes as we took a merited lead.
PSG sought to summon up a response but City held firm to seal what was a thoroughly deserved victory and a night to remember!
PSG: Navas, Hakimi, Marquinhos, Kimpembe, Tavares Mendes (Ebimbe 68), Paredes, Herrera (Danilo 59), Gueye (Di Maria 68), Messi, Mbappé, Neymar
Subs: Ramos, Verratti, Icardi, Dagba, Wijnaldum, Diallo, Kehrer, Ebimbe, Franchi, G Donnarumma
On a night filled with no end of hugely impressive displays, Riyad Mahrez provided a master class in attacking wing play.
There’s something about facing PSG that seems to bring the best out of our Algerian and he was immense from the first whistle, proving a thorn in the visitors’ side all night long.
Pochettino’s side will be fervently hoping they don’t have to contend with him again this term!
What it means
City can look forward to next month’s group finale away to RB Leipzig safe in the knowledge our ticket to the last 16 and top spot is already secure.
With a punishing December schedule, it means the pressure and intensity will be somewhat relaxed for our trip to Germany.
The perfect scenario for Guardiola and his squad.
This is the ninth straight season that City have qualified for the Champions League knockout stages.
It was also the fifth successive season we have finished top of our group with City only the second English side to achieve that feat after Manchester United.
Incredible consistency and a nod to our all-round excellence in Europe.
"Of course, PSG, what a team, what players, what could I say. Performance is quite similar to Paris a month ago. Today we created more chances in the first half.
"We played really well and always we had the sense that they could run, wow. They have a lot of quality, we tried to defend away from our goal because they can do anything.
"Except for the five minutes after our goal when they counter attacked but could not finish because Ruben defended really well… Congrats to everyone in the club.
"We are into last 16 and will try our best in February to go to quarters."
City are back in Premier League action on Sunday when we play host to West Ham United.
Kick-off at the Etihad is slated for 2pm and, as usual, we will have comprehensive coverage on mancity.com and our official app.
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