Leandro Dendoncker's 15th-minute own goal gave the Citizens a deserved half-time lead before Conor Coady brought Wolves level with his first goal in over two years.
The hosts came firing back though and retook the lead when Gabriel Jesus stabbed home from close range before Riyad Mahrez put the game to bed with a third on the 90-minute mark.
Jesus added gloss to the scoreline as he grabbed a second with the last kick of the game, with the result a little harsh on the visitors, who gave as good as they got in the second half.
Story of the Match
It was one-way traffic through the early exchanges, as the hosts set up an early barrage on Rui Patricio's goal, and when Dendocker turned Mahrez' low cross into his own goal after 15 minutes, it looked as though it could be a long night for Nuno's men.
Wolves weren't afforded any time on the ball in the first period as City dominated possession in trademark fashion, with the only criticism of Pep's men that despite their dominance, they only grabbed the one goal in the first 45.
With that said, the hosts could've counted themselves unfortunate not to double their lead on the stroke of half-time after Ayermic Laporte had a close-range effort ruled out by yet another contentious VAR decision.
But despite a damning lack of attacking impetus in the first-half, Nuno held fire on the changes at half-time, instead tasking his starting eleven with going out and playing expansive football in the second period.
And they did exactly that.
A higher intensity from the visitors allowed Ruben Neves and Joao Moutinho the ability to get involved more in the game from the centre of the park, and it was the latter who was at hand to set up his side's equaliser on the hour mark.
The Portuguese midfielder's deep freekick found a diving Coady, who powered a low header into the bottom corner for his first-ever Premier League goal, one which allowed Wolves the most unlikely of routes back into the game.
The visitors were in the ascendancy following their equaliser and will rue missed chances from Adama Traore, who twice failed to test Ederson from inside the Manchester City area.
And if there's one side who will make you pay for missing opportunities against them, it's Pep Guardiola's Manchester City.
City upped the tempo following Wolves' period of attacking threat and after a period of sustained pressure, they found the all-important second 10 minutes from time.
Jesus was the man to get it, pouncing on Kyle Walker's low cross to fire home from close range, a goal which was met by a roar of relief from Pep Guardiola on the touchline.
Mahrez steered home a third in stoppage time before Gabriel Jesus reacted quickest to a loose ball to poach a second with the last kick of the game.
The 4-1 victory - which flattered the runaway league leaders - means City are now 15 points clear of second-placed Manchester United, who they meet on Sunday.
Pep's men are now just four games away from equaling Ajax' 25-match winning streak - a top-flight record - set by their 'Invincible' side of 1995.
City Battle On
Manchester City have won 21 matches in a row, which is frankly, quite absurd.
They have played some sensational football in that time, but as they showed tonight - and on Saturday in their 2-1 victory over West Ham - they can battle through tough spells across the 90 minutes and find a way to win
This run will come to an end eventually, it has to. Doesn't it?
Riyad Mahrez was the MOTM tonight, with the silky winger continuing his recent upturn in form.
The Algerian was the creator in the first half, when he forced Dendoncker's own goal, before marking his name on the scoresheet with a composed finish late on.
He's become one of the first names on Pep's teamsheet of late and, if this rich vein of form continues, he won't be leaving it anytime soon.
VAR Controversy Continues
Three of the five goals this evening were checked by VAR for marginal offside decisions, something which is becoming an all too common occurrence in the Premier League.
It was the decision to rule out Laporte's effort in the first-half that caused the most controversy of the three, with a review of the rules clearly needed in order to avoid similar dismay next season.