Paul Ince's side celebrated with bottles of bubbly in front of their delighted fans at the end but City didn't go down without a fight in a game packed with incident.
Full-back Jude Stirling set the MK Dons on their way when he headed home Lloyd Dyer's inviting cross after 13 minutes and they doubled their tally five minutes later when the same combination made the most of some shocking Bradford defending.
This time Stirling turned provider as his long throw-in was allowed to bounce near the City penalty spot and Dyer raced in unmarked to send his half-volley past Bradford's stranded keeper Scott Loach.
City did have their chances, but striker Barry Conlon fired into the side-netting after five minutes and midfielder Kyle Nix mis-hit his shot from six yards with the goal at his mercy.
Loach impressed with an excellent tip-over to keep out a 30-yard free-kick from all-action MK Dons skipper Keith Andrews, but the two-goal blast put the visitors in the driving seat.
Bradford's cause was not helped in the 38th minute when in-form winger Joe Colbeck was shown a straight red for his lunge at Dean Lewington.
Referee Karl Evans incurred the wrath of the home fans and was given a mouthful by City boss Stuart McCall at half-time, but the Bantams grabbed a lifeline in the last minute of the half when Omar Daley fired home.
The tricky winger took advantage of a loose ball to surge into the visitors' box and, after dribbling round two defenders, he drilled a left-foot shot under Willy Gueret.
The second half was just as action-packed as the first with goal-line clearances at both ends and a near-comedy third goal for the visitors.
City stalwart David Wetherall came close to levelling on his final home appearance before retirement when his looping header was nodded off the line by Andrews, but Bradford should have gone 3-1 down following a Loach blunder after 74 minutes.
The keeper failed to spot striker Aaron Wilbraham lurking behind him as he rolled the ball out for a clearance upfield, but having nicked the loose ball, the frontman unluckily hit the bar with his quick turn and shot from 25 yards out.
City full-back Darren Williams booted a goal-bound shot from substitute John Miles off the line with five minutes to go and, at the death, Bantams centre-half Mark Bower amazingly volleyed over the MK Dons bar from two yards out.