Valencia said City agreed to loan Negredo to the Spanish club for one season, with the deal including an option to buy.
Valencia made the announcement on the stroke of midnight local time as the summer transfer window closed. It did not disclose the financial details of the deal.
Negredo is recovering from a broken right foot he suffered in a preseason game in July.
The 29-year-old Negredo joined Manchester City F.C. last summer from Sevilla on a deal reportedly worth 20 million pounds (then $30 million), but after a promising start his production of goals waned as the season wore on.
He scored 23 goals in 49 appearances for City, helping it win the Premier League and League Cup.
He was also part of Spain's European championship squad in 2012.
Negredo is the first high-profile player Valencia has brought in since Singapore tycoon Peter Lim bought the club. He will join Paco Alcacer and new arrival Rodrigo Moreno in attack.