By SABC Sport
31st January 2023
The surprise deadline-day deal includes an option for the German club to make the move permanent, for a fee of around 61.5 million Pounds, in the summer.
Portugal international Cancelo, 28, is understood to have been keen on the move having found game time limited at City since returning from the World Cup.
Bayern sporting director Hasan Salihamidzic told the club's website: "We're very happy that Joao Cancelo will now play for FC Bayern.
"We've signed him on loan now and have the possibility of signing him permanently in the summer.
"Joao is a player we've been thinking about for a while now because we very much appreciate his qualities. He's the optimal fit in our system with his attacking style of play and dynamism."
Cancelo had been a key part of Pep Guardiola's side since joining City from Juventus in a 60 million Pound deal in 2019 and helped the team win two Premier League titles.
However, he has started just three games since top-level domestic football resumed in December and there have been reports he had become a disruptive influence in the dressing room.
With teenager Rico Lewis having impressed this term and three of City's five senior centre-backs being capable of playing at full-back, Guardiola feels he has adequate cover and has not stood in his way.
Cancelo told Bayern's website: "FC Bayern is a great club, one of the best in the world, and it's enormous motivation for me to now play alongside these extraordinary players.
"I know that this club, this team, lives for titles and wins titles every year. I'm also driven by the hunger for success. Ill give my best for FC Bayern."
Cancelo also sent a message to City fans, writing on Instagram: "Once a Cityzen, always a Cityzen. Thank you."