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Roberto Mancini's side capitalised on the title life-line handed to them via United's shock 4-4 home draw with Everton earlier in the afternoon, while Terry Connor's side became the first side to drop out of the top flight this season.
Goals from Sergio Aguero and Samir Nasri sealed victory for the visitors who now have their fate back in their own hands ahead of next Monday's derby with United.
City have a superior goal difference to United and, if they win their last three games, they will claim the title.
There was little doubt about the outcome at Molineux once Aguero had broken the deadlock just before the half-hour mark.
Wolves showed plenty of spirit but defeat has brought an end to their three-year tenure in the top flight after a dreadful campaign.
They briefly led the division after collecting seven points from the opening three games but since then have picked up just 16 out of a possible 96.
Connor was handed the responsibility of keeping Wolves up after replacing the sacked Mick McCarthy in February but two points from 10 games under him have sealed their fate.
Carlos Tevez, fresh from his hat-trick against Norwich, had the first attempt on goal and was only just too high with a dipping 25 yard drive.
Wolves retaliated and Sebastien Bassong had a shot deflected wide after Michael Kightly's corner had been half cleared.
Aguero beat the offside trap and drilled a low shot inches wide of the far post.
City keeper Joe Hart had to be alert to parry aside a 20-yard drive from David Davis.
Samir Nasri spurned a good chance to put City ahead after 16 minutes when he shot wide after being found in space by Pablo Zabaleta.
City started to enjoy the bulk of possession and a mis-placed headed back pass from Richard Stearman played in Aguero, who opted for a first time flick which went wide.
Aguero was then just off target from 15 yards as gaps started to appear in the Wolves back four.
But after 27 minutes Aguero put City ahead with his 29th goal of the campaign.
Gael Clichy made good ground down the left before picking out the run of Aguero with a pinpoint cross.
He had time to bring the ball down before slotting his shot past Dorus De Vries into the corner of the net.
City were now in total control and Aguero teed up Tevez but his curling effort flew straight at De Vries.
Bassong blocked a shot from Tevez, while Nasri flashed a dangerous ball across the box.
Yaya Toure became the first player to be booked after 55 minutes for chopping down Kightly.
Wolves were showing plenty of spirit and Hart was called into action to turn aside a Fletcher header after Bassong had won the initial aerial battle.
Tevez twisted and turned before sending a dangerous ball across the six yard box but no-one was on hand to apply the finishing touch.
City kept searching for the second goal but Stearman did well to block a low shot from Tevez.
After 74 minutes Nasri put the outcome beyond doubt.
Tevez was fouled by Davis, took the free-kick himself and exchanged passes with Clichy before finding Nasri in space.
He had time to drill a low shot into the opposite corner of the net.
City substitute Adam Johnson quickly made his presence felt, forcing a low save out of De Vries as City ended on top.