The Englishman finished a wonderful team move midway through the first-half as Pep Guardiola’s side kept up their 100 per cent record in Group C.
After dominating possession with little reward, City found a breakthrough in the 36th minute when Gabriel Jesus trapped a crossfield ball and fed Raheem Sterling, who produced a sublime backheel pass for Foden to slam the ball into the net.
The Greek side stayed in the game and were not far from finding a late equaliser when Konstantinos Fortounis pulled his shot just wide of the far post from a tight angle, while defender Pape Cisse headed over the bar in added time.
City's fourth consecutive win in Europe's elite competition left them top of Group C with 12 points, while Olympiakos are third with three.
There was further good news as Sergio Aguero and Fernandinho both made their returns from injury as substitutes, while Kevin de Bruyne and Kyle Walker were given the night off ahead of the Premier League clash with Burnley this weekend.
Additional reporting by Reuters.