Sterling scored from six yards with a shot into the bottom right corner off a cross from Bacary Sagna in the 47th minute.
Fernandinho added a second goal less than 10 minutes later at Etihad Stadium with a firm strike after an assist from David Silva.
City won its 10th straight league match to set a club record. It leads the league with 12 points from four games this season, having scored 10 goals and conceded none.
Sterling strikes, Luiz sent off as Man City outclass Arsenal