City were reportedly ready to break the bank to sign the 29-year-old after he decided he wanted to end a dismal year at Barcelona last summer.
The Barclays Premier League side were rumoured to be ready to shell out up to ?500,000 a week to sign the former Ajax forward.
Milan for me: Ibrahimovic is happy at the San Siro after leaving Barcelona and snubbing Manchester City
But Swede Ibrahimovic opted to move to the San Siro, where he has blossomed under coach Massimiliano Allegri, scoring 13 league goals to help the Rossoneri climb to the top of the Serie A standings.
He admits he held talks with the Eastlands club before moving to Milan but insists a move to the seven-time European champions was his only option.
'I had a couple of talks with City and they had a fantastic project going on but I'm not one of those players who wants to go there and play for money,' Ibrahimovic said.
'For me, it's important to see what kind of future there is, what kind of possibilities there is. For me, the project of City is not now.
'I think in a couple of years they will be a top team but Milan now is at the top and for me, I want to be playing at the top when I'm 29 rather than 32.
'It was not about money. If you are a great player there is money everywhere.'
One of the main reasons why Milan have spent the majority of the campaign at the top of the table is Ibrahimovic's partnership with Brazilian duo Alexandre Pato and Robinho in attack.
City old boy: Brazil star Robinho never lived up to his billing after arriving at Eastlands for ?32.5m
Robinho is at the San Siro on loan following a disappointing two-year spell at City, where he failed to live up to expectations after a then British record ?32.5million transfer from Real Madrid.
Ibrahimovic feels the 27-year-old has matured a lot since his move to Italy and believes his team-mate is playing some of the best football of his career.
'Robinho he is a fantastic player,' he said. 'I train and play with him every week and he always does tricks that I have never seen before.
'When he went to City when they were not as good as they are today. If they had the same team now when he went there it would've been a different story.
'He took the challenge and he has to be proud of that. He made the move from Real Madrid to Manchester City and in some eyes that is not a step up - it is a step down.
'But City, now, they have made big investment and they have brought in fantastic players. It's not the same team. I am happy he is in my team and I enjoy playing with him.'
Ibrahimovic will be out to prove that he is at his peak when he takes to the field against Tottenham in Milan's Champions League last-16 first-leg tie at the San Siro.
The striker had not scored against English opposition until he ended that hoodoo with a double against Arsenal last season.
Dangerous: Bale (left) is out for Spurs but AC Milan manager Allegri is wary of Lennon (centre) on the wing
The Rossoneri may be three points clear at the top of Serie A, but they are beset by injury problems and are also facing a Spurs team that beat their bitter rivals Inter 3-1 at White Hart Lane last year.
Gareth Bale was the inspiration behind the Londoners' victory that November night, running rings around Inter right-back Maicon just a month after blasting three goals past the holders in Tottenham's 4-3 loss at the San Siro.
The visitors will be without the flying Welshman for the first leg due to a back injury but Allegri reckons Tottenham have plenty of other credible attacking options.
The Italian said: 'Aaron Lennon is a very quick and intelligent player, Peter Crouch is a good player too so we will need to be careful.
'They have four solid defenders also. They are a very fit and strong, physical side.'
Bale's hat-trick against Inter drew the world's attention to the 21-year-old, who is now said to be a summer target for both Milan teams as well as Barca and Real Madrid.
Allegri admits he would love to have the winger in his squad.
'I don't think we can compare him to (Lionel) Messi or (Cristiano) Ronaldo yet but this year he did the right things,' the 43-year-old said.
'He is a player that any manager would like to have in his side.'
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Explore more:People: Robinho, Peter Crouch, Alexandre Pato, Aaron Lennon, Gareth Bale, Maicon Places: Barcelona, Milan, Italy