City have been heavily linked with Mendy for a number of weeks and it has long been thought that a deal was close. However, with the clubs still seemingly too far apart in their valuation of Mendy, the saga is set to continue for a little while yet.
According to Sky Sports, City's offer of £44.5m was turned down by the French champions.
Interestingly, it appears that City's recent £50m acquisition of Kyle Walker, now the most expensive Englishman of all time, could be to blame for the rejection.
The suggestion from Sky's Bryan Swanson is that Monaco believe Mendy to be worth more than Walker and therefore are holding out for a fee in excess of the £50m spent on the right-back.
City have been chasing new full-backs on both sides ever since taking the decision to release Pablo Zabaleta, Bacary Sagna and Gael Clichy at the end of last season.
Walker's arrival was supposed to be in addition to Dani Alves until the veteran Brazilian free agent opted to join Paris Saint-Germain instead. Mendy is being eyed as a starter on the left ahead of Aleksandar Kolarov, whom Pep Guardiola has also used a centre-back.
City are also said to be close to sealing the £26.5m signing of Real Madrid right-back Danilo.
Besides Walker, only midfielder Bernardo Silva and goalkeeper Ederson have arrived so far.