The group reached agreement late Sunday with Thaksin, board member Sulaiman al-Fahim told The Associated Press.
The club said in a statement that a "memorandum of understanding" has been signed and the deal is subject to a due diligence, allowing investors to request information from Man City and the Premier League.
Financial terms were not immediately available, but the UAE group described it as a "huge takeover" that gives the consortium "all the management rights."
Thaksin will retain a minority stake and remain on the board as honorary president without any administrative responsibilities, said al-Fahim, who brokered the deal but is not one of the investors.
The former Thai premier bought Man City in June 2007. He had his assets frozen last month and fled to Britain to escape corruption charges in Thailand, saying that he couldn't be assured of a fair trial.
"I am delighted to be building this new partnership with Abu Dhabi United, who share my vision for Manchester City to join the top tier of British football brands on an international stage," Thaksin said. "I look forward to this new partnership delivering great things."
Al-Fahim, the chief executive of Abu Dhabi-based developer Hydra Properties, reached the deal at the Abu Dhabi Emirates Palace Hotel with Thaksin and Khalid Kadfour Al-Muhairy, the legal chief of the Emirates Group.
The little-known consortium is composed of "prestigious businessmen" in the UAE's capital city, al-Fahim said, declining to name the group's members.
Al-Fahim said the group was attracted to the "richest European competition with more than $3 billion revenue."
Like Thaksin, the new owner wants manager Mark Hughes to deliver Champions League qualification by breaking into the top four of the Premier League.
"We will give support to the club by investing and buying new players," al-Fahim told the AP. "My goal is to make Manchester City one of the top four clubs in the Premier League."
Man City has gone without a major trophy since 1976 when it won the League Cup, English football's second-tier knockout tournament. City last won the league title in 1968.
After two wins in the first three matches of the season, City is third in the standings - one point behind leader Chelsea.
The new owners' ambitions were immediately evident with a $45-million bid submitted to sign Tottenham striker Dimitar Berbatov and hijack crosstown rival Manchester United's long-running pursuit of the Bulgarian before the transfer window closed at 7 p.m. EDT.
Al-Fahim pledged to clear any pending payments and solve the club's financial problems, which forced Thaksin to obtain loans from former chairman John Wardle.
Al-Fahim said the deal was a "massive achievement" that will help make Abu Dhabi a global sports capital.
"We were looking for a deal that can support Abu Dhabi sport worldwide," he said. "I am opening a window for my UAE players to play in the Premier League. Our idea is to support the youth in the UAE, and to help the talented players to play in the UK and Europe."
AP Business Writer Adam Schreck contributed to this report from Dubai, United Arab Emirates.