Pep Guardiola’s side are accused of committing “serious breaches” of UEFA’s Financial Fair Play (FFP) regulations, by overstating sponsorship revenue in its accounts between 2012 and 2016.
The reigning Premier League champions were also fined £27million.
City have, however, vowed to overturn what they described as a “flawed” decision by UEFA.
The Etihad side have never won the Champions League, but had defeated Real Madrid 2-1 away in the first leg of their last 16 tie, before the 2019/20 competition was indefinitely suspended.
If the ban is upheld, they would be able to complete their campaign in this season’s competition should it restart.