The European governing body confirmed the punishment following a meeting of their control and disciplinary body which took place last week.
City lodged a complaint after Balotelli was subjected to monkey taunts during the first leg of their Europa League last-32 tie at the Estadio do Dragao on February 16. Porto have three days to appeal against the verdict.
There were outbreaks of monkey chanting throughout the game, which City won 2-1, but it appeared most noticeable when Balotelli was substituted 12 minutes from time.
Porto coach Vitor Pereira later claimed there may have been a misunderstanding and that fans were actually chanting, "Hulk, Hulk, Hulk" at the club's star player.
That has been dismissed with a statement reading: "The UEFA control and disciplinary body has imposed a fine of 20,000 euros on FC Porto for racist conduct of their supporters at their first-leg round of 32 UEFA Europa League match against Manchester City FC on 16 February in Porto."