Needing to win to be assured of holding off Liverpool, City were in danger of blowing it as Matty Cash and former Reds star Philippe Coutinho struck at the Etihad Stadium.
Yet Pep Guardiola's side showed all their champion quality to rally with Ilkay Gundogan coming off the bench to score twice either side of a superb Rodri strike in a remarkable five-minute spell.
City had known that second-placed Liverpool, trailing by just a point, could overtake them with victory over Wolves and there were times in the afternoon when they lived on their nerves.
There were few signs of the tension to follow as the game kicked off amid a joyous and raucous atmosphere.
City supporters had given their team a rousing welcome outside the stadium and there was a feeling celebrations were almost getting under way as news filtered through of an early Wolves goal.
City made most of the early running but Villa, who were warned about time-wasting early on by referee Michael Oliver, grew into the game and took a shock lead eight minutes before the interval.
Lucas Digne, the former Everton full-back, broke clear down the left and clipped in a fine cross from the byline. Cash, running in from the opposite side, met it with a firm header that Ederson could not keep out.
With Liverpool having now equalised against Wolves, the mood was transformed. City were stunned and suddenly looked vulnerable.
Fernandinho looked particularly shaky as Ollie Watkins twice threatened, first having a shot blocked and then being denied by a back-tracking Stones.
The interval came at a good time for City and it was no surprise that Fernandinho did not return for the second half. Oleksandr Zinchenko took his place and the back line was reshaped.
City upped the tempo and Gabriel Jesus should have equalised when picked out at the back post by Joao Cancelo but volleyed over.
Kevin De Bruyne went close with a dipping free-kick but City were caught out by a long clearance upfield by Robin Olsen, which Watkins headed on to Coutinho.
The Brazilian's first touch was exquisite and completely wrong-footed Aymeric Laporte, exposing Ederson at the near post. Coutinho kept his cool and found the bottom corner.
Villa manager Steven Gerrard was more than doing his job for former club Liverpool and this was now a serious test of City's mettle, but they rallied.
Substitutes Raheem Sterling and Gundogan combined to pull one back on 76 minutes. The German had a free header at the back post after being picked out by Sterling and made no mistake.
City pressed again and moments later levelled as Zinchenko picked out Rodri on the edge of the area and the Spaniard stroked the ball into the bottom corner.
There was more to come with Gundogan again in the right place at the back post as De Bruyne whipped in a good ball.
The comeback was complete and, even though an equaliser from Villa could have changed the picture again, it never looked like happening as City celebrated another league crown.
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