It now seems that St. Mary's Park is his destination, with a host of clubs having already been swirling around.
Sportsmail revealed Mark Hughes' interest in the 22-year-old last month and City could pocket up to £13.5m should additional clauses be triggered.
Norwich-born Gunn, the son of Canaries legend Bryan, was an ever-present in the Championship for Norwich last season and was voted into third place by fans in the player-of-the-season stakes. The deal for Gunn surely throws serious doubt over the future of Fraser Forster, whose form last season was nothing like what it was during the early stages of his spell on the south coast.
McCarthy finished the season as first-choice goalkeeper, with Forster's last game the 5-2 Premier League defeat by Tottenham at Wembley on Boxing Day.
Gunn has represented England at various levels from Under-16s to Under-21s, winning 11 caps with the latter.
Gunn will leave Manchester City with Ederson, Claudio Bravo, Daniel Grimshaw as the remaining first-team goalkeepers for the blue side of Manchester.