A goal each by Sergio Aguero and David Silva had given City a 2-0 lead going into the break. Dynamo pulled one back in the second half through midfielder Vitaliy Buyalskiy.
But Toure’s long range effort not only ensured there were no further hiccups in the game but also put City on course to reach the quarter-finals for the first time in their history.
City came into the match against the backdrop of a crushing 5-1 defeat to Chelsea in the fifth round of the FA cup.
The return of regulars in the starting XI for the Dynamo, in contrast to the fielding contained number of untested youngsters against Chelsea, turned City into a completely different unit as they dominated the game from start to finish.
City defender Vincent Kompany termed it an exceptional performance and said that his side showed lot of intensity.
In the other round of 16 encounter, PSV Eindhoven held Atletico Madrid to a 0-0 draw despite being a man down for the last 20 minutes of the game in Eindhoven.
Atletico had two golden chances to take the lead in the first half but Luciano Vietto and Antoine Griezmann missed one-on-ones with PSV goal keeper Jeroen Zoet.
Atletico could have taken advantage in the final quarter of the match after Gaston Pereiro was given the marching orders for a second bookable offence.
But the 2014 runners up failed to score meaning the match will be decided when the two sides clash in the second leg on March 15 at the Vicente Calderon in Madrid.
PSV reached the round of 16 for the first time in nine years after beating Manchester United in the group stage.