Bouaddi, who has topped rankings of the World Cup's breakout performers across two successive matchdays, is valued at around €70m by Lille, with whom he is contracted until 2029.
The 18-year-old had previously been most strongly linked with Real Madrid, but Manchester City's arrival adds another powerful suitor to a pursuit that also involves Arsenal, Chelsea, Liverpool and Paris Saint-Germain. A bidding war between Manchester and Madrid could push the fee beyond Lille's current asking price.
City's move for Bouaddi reflects a summer recruitment strategy built around securing elite young midfield talent, and the player's World Cup performances have accelerated interest that was already building before the tournament began.
Whether City or Madrid ultimately lead the chase will become clearer in the coming weeks, but Bouaddi's profile — an 18-year-old under contract for three more years at a club willing to sell — means the market around him is only going to grow more competitive.
Bouaddi has been the story of the tournament's opening rounds for many observers. His performances at the World Cup have given the transfer race a new sense of urgency, with clubs that had been monitoring him from a distance now moving into more active pursuit.
Lille's €70m asking price reflects both his contract length and his status as one of the most sought-after young midfielders in Europe. With PSG also in the mix alongside City, Real Madrid and three other Premier League clubs, the eventual fee could climb significantly beyond that figure if a full auction develops.
City have a strong track record in the market for young midfielders and the resources to compete with any club. Their decision to enter formally changes the dynamic of a pursuit that had previously centred on Real Madrid.