Safety features for the two-seater air taxi include emergency parachutes and nine independent battery systems, according to Dubai's Road and Transport Authority (RTA).
It said the prototype, supplied by Germany-based Volocopter, can fly for 30 minutes at a maximum speed of 100 kilometres per hour (62mph).
The RTA envisions that the hover-taxi will eventually be integrated into the city's existing public transport network, which includes a metro system, tramway and buses.
Passengers would be able to book their "autonomous air taxi" and track its arrival and route using an app.
Authorities anticipate five years of testing to put in place safety procedures and legislation governing the cutting-edge mode of transportation.
Home to Burj Khalifa, currently the world's tallest tower, Dubai is a leading tourist destination in the Gulf, attracting a record 14.9 million visitors last year.
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