In a tension-wracked climax to one of the most dramatic title battles for decades, City looked doomed to failure when trailing 2-1 to relegation-haunted QPR while illustrious neighbours
Wayne Rooney's header seemed to have clinched a 13th Premier League crown for United manager Alex Ferguson but Dzeko equalised for City in the second minute of the five added on at the Etihad and Aguero struck gold.
The full-time whistle had blown at Sunderland but in Manchester, with barely 60 seconds to play in the 380th match of the Premier League's 20th season, the Argentine burst into the area to lash his 23rd goal of the campaign and spark ecstatic scenes on the pitch, the stands and everywhere else in the Sky Blue half of the football-mad city.
It was the 1,066th goal of the season, a Premier League record, and City's 93rd, a telling statistic as they edged out United on goal difference alone.
With the Manchester sides finishing on 89 points, it was the first time the English title had been settled on goal difference and the first occasion the top two had finished level on points since Arsenal and Liverpool had to be separated by goals scored in the 1988-89 season.
City's nostalgic "Blue Moon" anthem had seemed more appropriate, however, when QPR, who still avoided relegation thanks to Bolton Wanderers' draw at Stoke City, struck through Djibril Cisse and Jamie Mackie after the break to stun the hosts who had led at halftime through Pablo Zabaleta's goal.
With QPR, reduced to 10 men after former City midfielder Joey Barton elbowed Carlos Tevez, defending like men possessed, there was desperation on the pitch and the technical area while some City fans were already wiping tears off their cheeks.
Substitute Dzeko restored hope, however, and Aguero, one of the mega-rich club's best signings since Abu Dhabi's Mansour bin Zayed Al Nahyan began pumping hundreds of millions of pounds into the transfer kitty, made the dream a reality.
"Five minutes from the end I did not think we could win this game. We wanted this title and we deserved to win this championship," City manager Roberto Mancini told Sky Sports before going off to hold the trophy aloft.
"After 44 years I dedicate this to all our supporters. It's an incredible moment. I thought we could get to 2-2 and hope Sunderland could draw. It's been a crazy season."
Captain and central defensive rock Vincent Kompany, a £6m bargain among the half a billion pounds worth of players signed since the Abu Dhabi takeover in 2008, shared the feelings of most of the 48,000 fans present.
"I want to say it is the best moment of my life but if I'm honest then I would say please never again this way," he said.
"Did I give up? No, I never stopped believing. When Edin Dzeko scored to make it 2-2, it reminded me of our late goals against Tottenham and Sunderland."
While City savoured being top dogs in England for the first time since 1968, United were left to contemplate their first trophy-less season since 2004-05.
Away from the euphoria of Manchester there was heartbreak for
Victory would have earned them another season in the top flight but instead QPR survived to make sure all last season's promoted sides live to fight another campaign amongst the elite.
Tottenham face an anxious wait to see if they get another crack at Champions League football as victory for Chelsea in this year's final against Bayern Munich would mean they take a spot in next season's competition at Tottenham's expense.
With 17 wins and a draw from their previous 18 league matches at their Etihad fortress, the victory City required to seal the title, barring a United goal avalanche at Sunderland, over relegation-haunted QPR appeared a formality.
Then again, the Premier League has delivered twists galore over the past nine months and the final day was no exception.
News of Rooney's goal at Sunderland added to an already tense atmosphere at the Etihad and the relief was palpable when Zabaleta's shot beat Kenny after 38 minutes.
The City fans' joy turned to horror after the break, though, as Joleon Lescott's mistake allowed Cisse to equalise before Mackie put the visitors ahead either side of Barton's act of madness which could land him a lengthy ban.
As City laid siege to the QPR goal only to be denied by Kenny's heroics and frantic defending, "City throw it away" headlines loomed while visiting boss Mark Hughes, sacked by City to make way for Mancini in 2009, looked set for the last laugh.
Then, with time appearing to stop, City turned the football world on its axis in thrilling style, moving out of the shadow of their mighty neighbours and completing a transformation from eccentic also-rans to kings of English football.