Manchester City were hammered 4-0 by Tottenham at the Etihad Stadium, extending their losing run to five matches in all competitions.
Spaniard Guardiola's decision means he will spend more than a decade at the club he joined in 2016 and has led to a dazzling array of silverware, including six Premier League titles and one Champions League crown.
Manchester City have lost each of their last four matches in all competitions, and Pep Guardiola admitted he is worried.
City's 4-1 defeat to Sporting Lisbon on Tuesday was a third straight loss for the English champions -- the first time that has happened since 2018.
Pep Guardiola believes Manchester City will struggle to overcome a mounting injury crisis but encouraged the English champions to bounce back in Tuesday's Champions League trip to Sporting Lisbon.
Sporting Lisbon coach Ruben Amorim, who will take over at Manchester United next week, hailed Manchester City manager Pep Guardiola as the best in the world on Monday.
The defeat dropped City to second spot, two points behind Liverpool who recovered to beat Brighton & Hove Albion 2-1.
Pep Guardiola says Manchester City face an "emergency" in certain positions as he grapples with a punishing injury list ahead of Saturday's trip to Bournemouth.
"What can I say?," said the Spaniard. "First, to congratulate him and all his family and their friends, it's incredible news for him and for all of us."
Manchester City have lost all four Premier League matches they have played at the Tottenham Hotspur stadium but the defending champions must change that when they visit the North London side on Tuesday, manager Pep Guardiola said.
If Arsenal fail to beat United, then City can wrap up an unprecedented fourth successive English title with a victory at Tottenham on Tuesday.
Pep Guardiola insists Manchester City will be prepared for whatever conditions come their way at Fulham on Saturday after training on long grass.
Arsenal resume their quest for Premier League glory against Bournemouth this weekend knowing they have no margin for error with Manchester City hot on their heels.
Manchester City manager Pep Guardiola has backed England to win Euro 2024 if they follow his club's route to continental glory.
Asked about City's chances of winning the Premier League, Guardiola told reporters: "It's far away. Ask me this question when we are top of the league and (have) one game left.
Manchester City overcame relegation-threatened Nottingham Forest 2-0 on Sunday to close to within one point of Premier League leaders Arsenal.
Phil Foden is relishing "six more finals" after helping keep Manchester City in control of the Premier League title race by reaching the landmark of 50 top-flight goals.
Guardiola was furious that the Football Association and television broadcasters set City's semi-final for Saturday instead of giving them an extra day to recover after Wednesday's penalty shoot-out loss to Real Madrid in the Champions League quarter-finals.
Pep Guardiola's side were second best for long periods of the semi-final, but Chelsea wasted a string of chances before Silva delivered the knockout blow six minutes from full-time.