As part of their settlement with Uefa, Premier League champions City, owned by Abu Dhabi's Sheikh Mansour, and Qatari-owned French champions PSG have also agreed to curbs on transfer spending over the next two seasons.
City said their transfer spending would be capped at a net figure of 60 million euros this summer but added that the restrictions would not greatly impact their plans.
The deals broadly matched recent media reports of the likely sanctions under new rules that prevent clubs from running up unlimited financial losses.
City made clear that they had reluctantly agreed a deal with Uefa, believing they had complied with the rules.
However, had they fought on they would have risked a ban from next season's Champions League.
"In normal circumstances, the club would wish to pursue its case and present its position through every avenue of recourse," City said in a statement.
"However, our decision to do so must be balanced against the practical realities for our fans, for our partners and in the interests of the commercial operations of the club," it added.
This will effectively be the end of the process unless rival clubs decide to challenge the punishments as too lenient.
Critics of the "Financial Fair Play" rules say they will entrench the established order in European soccer and prevent teams with wealthy owners from challenging the elite.
They also said that the threat to ban teams from Europe was a hollow one as Uefa would not want to weaken its lucrative Champions League competition.
Money back?
PSG and City will each get 40 million euros of the fine back should they stick to the terms of their settlement with Uefa in coming seasons.
They will only be able to name 21 players in their Champions League squads for next season, while rivals will be able to pick from a pool of 25. They are also not allowed to increase their wage bills next season.
City, who have spent hundreds of millions of pounds since Sheikh Mansour bought the club in 2008, said they expected to move into profit from next season after heavy losses to build a team to compete with the best in Europe.
City said they believed they would comply with all Uefa's conditions and be free of any restrictions for the start of the 2015-16 season.
They posted combined losses of almost 149 million pounds ($250.76 million) for the past two seasons - £97m in 2012 and £51.6m in 2013.
PSG said it accepted the sanctions although they would be a "tremendous handicap" in competing with top European teams.
In doing its sums, Uefa angrered PSG by assigning a lower value to a controversial sponsorship deal the club has with the Qatar Tourism Authority that was reported to be worth 200 million euros per season.
"Our ambition to build one of the best and most competitive European football clubs will not be undermined by these measures," said PSG President Nasser Al-Khelaifi.
Uefa has handed lesser punishments to seven other clubs including Galatasaray of Turkey and Russia's Zenit St Petersburg. Two other Turkish teams -- Bursaspor and Trabzonspor -- along with Russian teams Rubin Kazan and Anzhi Makhachkala and Levski Sofia of Bulgaria were also sanctioned.
The headline numbers limit club losses to 45 million euros between 2011 and 2013 but there are various exemptions for spending on youth development, stadium infrastructure and older contracts, leading to haggling over their interpretation.
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