He scored five goals and provided one assist during a month where City won all seven Premier League games.
Raheem had to fend off the challenge of team-mate Joao Cancelo, who was also nominated.
On receiving the prize, Sterling said: “I am delighted to win this award again – but December was an amazing month for the whole team.
“The Premier League is the most challenging competition in the world, so to win all seven of our league games throughout the month of December is incredible.
“Contributing to those wins with goals has felt good and that makes me happy.
“Hopefully we can continue this form because 2021 has been brilliant for us.
"All of us want to win trophies at the end of the season and that is what our aim will be from now until then.”
Raheem is the first City player to win the Premier League Player of the Month this season.