There were four changes to the City side that beat Crystal Palace 2-0 in the Premier League at the weekend as Phil Foden, Kyle Walker, Riyad Mahrez and Sergio Aguero replaced Joao Cancelo, Gabriel Jesus, Bernardo Silva and David Silva.
City started slowly at the Etihad Stadium and they were almost made to pay in the 12th minute when Timothy Castagne got in front of Benjamin Mendy put powered his header just wide after good work from Robin Gosens down the left.
Josip Ilicic then finished off a quick Atalanta counter-attack on 19 minutes as he cut inside from the right and forced Ederson into a low save.
City’s first effort of note came on 25 minutes when Aguero cut inside Rafael Toloi and curled a left-foot shot towards the far corner which Pierluigi Gollini managed to save with his finger-tips.
However, it was Atalanta who took the lead in the 28th minute when Ruslan Malinovskiy sent Ederson the wrong way from the penalty spot after Fernandinho was guilty of bringing down Ilcic inside the area.
The Italian side’s advantage lasted only six minutes before City got on level terms.
Raheem Sterling’s cross dropped over the head of Andrea Masiello and to the feet of Aguero who marked his 100th European appearance by firing his shot through the legs of Gollini.
It was 2-1 on 38 minutes when Aguero grabbed his second in the space of four minutes as he converted a penalty after Sterling was clearly tripped by Masiello inside the box.
City stepped up a gear after the interval and it was no surprise when they made it 3-1 after 58 minutes.
Kevin De Bruyne did well to square the ball towards Foden and he unselfishly flicked it on again into the path of Sterling who opened his account on the night.
Ilicic should have pulled one back on 62 minutes but blasted his shot straight at Ederson, before City put the tie beyond doubt just two minutes later.
Ilkay Gundogan sent Sterling away down the left channel and he raced past Toloi before sending Gollini the wrong way with his effort inside the area for his second.
Ilicic thought he had got on the scoresheet moments later, but he was offside when he tucked away the rebound after Remo Freuler smashed the post.
To rub salt into the Atalanta wounds, Sterling completed an 11-minute hat-trick to make it 5-1 on 69 minutes as he turned in the rebound after Aguero was denied by Gollini.
Sterling should have scored his fourth of the game on 76 minutes when Foden sent him through on goal, but he dragged his effort wide with just Gollini to beat.
The tie ended on a sour note for City and Foden when he was red-carded for two bookable offences with just eight minutes remaining.
City are now five points clear at the top of the group and on course for the knockout stages, while Atalanta are bottom and pointless.