How do you disband cities in Civ3?

Get them down to either one or two population then build a settler or a worker ( depending on the population ) and you will be prompted if you with to disband the city or not
 
And, if you just want to get rid of the city w/o starving down and putting the last population point(s) to work, there is an "Abandon city" option in the menu when you right-click on the city.
 
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