The hosts took the lead early in the second half when Aguero blasted a shot from close range into the roof of the Sheffield United net, with the visiting side appealing in vain for a VAR intervention saying the ball struck referee Chris Kavanagh in the buildup.
It was another impressive performance from Chris Wilder's promoted side, who were unbeaten away in the league, but in the end third-placed City's sharpness in front of goal was decisive as Pep Guardiola picked up his milestone 100th Premier League win.
"Yet again we had another goal disallowed by VAR, that's about eight or nine over the weekend, this is not a situation helping the game with the small margins," said Wilder.
"But I will leave that for everyone else to talk about because I have said too much about it."
The result keeps Man City in third place in the Premier League, 14 points behind leaders Liverpool and one behind second-placed Leicester.
"Today I realised, why Sheffield are in the position they are in the table and didn't lose one game away," said Guardiola.
"We had problems [but] in the second half we were much better and in these type of games if the first 'goal' was not offside it would have been very difficult. Fortunately we could score two goals and win."