The 29-year-old moves to Goodison Park after four years at the Etihad stadium during which he won two Premier League titles at the club.
Delph made 22 Premier League appearances as City won the Premier League with a record 100 points in the 2017/2018 season but features just 11 times as they defended the league title.
Delph had further dropped down the pecking order after Manchester City brokered a club record deal for Atletico Madrid midfielder Rodri.
After sealing his move, Delph told Everton TV: "Every time I have played against Everton the first thing that comes to mind when you see the fans is passion.
"The Everton fans seem to know football, seem to understand it, it seems to be in their blood and they really back the team.
"I'm really happy to be here, I'm going to give absolutely everything - nothing less than 100 per cent. Hopefully we can push together, fans and players, to do something special.
"I wanted to be playing more regularly and the opportunity to come and play for Everton was too good of an opportunity to turn down.
"Ultimately, the goal is to win something. I've not come here just to be here - I've come here with ambitions to win things."
Delph is Everton’s third summer acquisition after goalkeeper Jonas Lossl and Andre Gomes joined from Huddersfield and Barcelona respectively.
Everton boss Marco Silva added: "When I look to bring a new player into our squad, the first thing I look for above all the other things is quality and Fabian is a player with high quality.
"Fabian is a player that can give us different solutions in our midfield because he can play in more than one position and that is important for us."
