A cloud is hanging over the English champions after the Premier League hit the club with more than 100 charges alleging breaches of financial rules dating as far back as 2009.
If found guilty, City could face a severe points deduction or even relegation from the top flight.
But City boss Pep Guardiola came out swinging in defence of the club’s hierarchy as he pointed the finger at jealous Premier League rivals for the accusations and his players followed him with a show of defiance on the field.
Rodri, Ilkay Gundogan and Riyad Mahrez all struck before half-time at the Etihad to edge ominously into Arsenal’s rear-view mirror ahead of a clash between the two on Wednesday.
Arsenal still have a game in hand, but City will now move to the top of the table should they win at the Emirates in midweek.
The Gunners’ 1-1 draw at home to Brentford on Saturday opened the door for City and unlike last weekend, when the defending champions missed the chance to pounce with defeat away to Tottenham, this time they made no mistake.
Guardiola also learned his lesson from an experimental line-up at Spurs.
Ruben Dias, Aymeric Laporte, Kevin De Bruyne and Gundogan were restored to the starting line-up and City looked much more like their old selves.
The City support made their feelings known before kick-off as the Premier League anthem was booed and a banner raised saluting the lawyer the club have hired to defend the charges.
Just four minutes in they had something to cheer as Rodri rose highest to power home a header from Mahrez’s corner.
Jack Grealish was in the mood to do some damage against his former club and only a brilliant finger-tip save from Emiliano Martinez denied the England international from finding the top corner.
– Haaland injury concern –
Much was made of City’s reluctance to hit Erling Haaland early in a feeble surrender to Spurs last weekend and the Norwegian was a far more persistent threat in behind the Villa defence.
Haaland created the second as his pace beat Martinez to De Bruyne’s ball over the top and he picked out Gundogan at the far post for a simple finish.
Grealish then lured Jacob Ramsey into a clumsy challenge to win a penalty, which Mahrez slotted home as Haaland surprisingly stepped aside.
That decision was perhaps explained by Haaland’s withdrawal at half-time as he appeared to be nursing a thigh issue, which will be a concern for Guardiola.
So too will be his side’s defensive record as another clean sheet was spoiled when Douglas Luiz robbed Bernardo Silva and freed Ollie Watkins to fire into the far corner on the hour mark.
Villa substitute Jhon Duran then smashed against the bar in stoppage time, but a second-half rally was too little, too late for Unai Emery’s men.