The US pop singer, 24, was awarded the distinction in an emotional meeting where all councillors voted unanimously in favour.
Grande was widely praised for setting up the charity concert at the Old Trafford cricket ground to raise money for the victims of the Manchester Arena bombing.
Suicide bomber Salman Abedi killed 22 people, including seven children, when he detonated a device at Grande’s show at the venue in May.
The singer raised £3m when she returned to the city to perform at the benefit gig alongside acts like Coldplay, Justin Bieber, Niall Horan, Black Eyed Peas and Katy Perry.
Sir Richard Leese, the council leader, put forward the motion, which was passed at a meeting on Wednesday.
He described Grande as ‘a young American woman for whom it would have been understandable if she never wanted to see this place again’.
Leese continued: ‘But no – instead she, as an artist, a performer, was determined that she would not perform again until she had returned to Manchester to perform.
‘In doing so, she brought comfort to thousands, she raised millions for the We Love Manchester Emergency Fund and became the first patron of that fund. And that’s why I propose that Ariana Grande is made the first honorary citizen of the city of Manchester.’
The singer, who has since resumed her Dangerous Woman world tour, told fans she was ‘moved’ by the gesture.
Writing on Instagram, she said: ‘I don’t know what to say. Words don’t suffice.
‘I’m moved and honoured. My heart is very much still there. I love you. Thank you.’
She ended her message with a bee emoji – the city’s emblem.