The Blues will travel to the London Stadium to play West Ham United, who are currently 17th in the Premier League table.
The two sides last met back in August at the Etihad Stadium, with City running out 3-1 winners.
The third round ties will be played across the weekend of January 6-9.
The full draw is as follows:
Ipswich Town vs Lincoln City or Oldham Athletic
Barrow v Rochdale
Manchester United v Reading
Hull City v Swansea
Sunderland v Burnley
QPR v Blackburn
Millwall v Bournemouth
West Ham v Manchester City
Brighton v MK Dons/Charlton
Blackpool v Barnsley
Birmingham v Newcastle
Chelsea v Notts County/Peterborough
Middlesbrough v Sheffield Wednesday
West Brom v Derby County
Everton v Leicester City
Liverpool v Newport County/ Plymouth Argyle
Wycombe Wanderers v Northampton Town/ Stourbridge
Watford v Burton Albion
Preston North End v Arsenal
Cardiff City v Fulham
Stoke City v Wolves
Cambridge United v Leeds United
Bristol City v Fleetwood or Shrewsbury
Huddersfield Town v Port Vale
Tottenham v Aston Villa
Brentford v Halifax Town/ Eastleigh
Bolton v Crystal Palace
Norwich City v Southampton
Sutton United v AFC Wimbledon
Accrington Stanley v Luton Town
