Guardiola’s previous deal was set to expire in seven months, meaning some were tipping him to leave City at the end of the season.
Following a disappointing season in which City’s two-year stranglehold on the Premier League title came to an end, and their Champions League dream came crashing down once again in a shock quarter-final defeat against Lyon, many felt he would bid farewell to the club next summer and make the next step in his managerial career.
But Guardiola has now committed his future to City by approving a contract extension that will keep him at the Etihad until 2023, the Premier League side have confirmed.
The new deal will take him to at least six years in the hot-seat, which is longer than most anticipated when he arrived in Manchester after four and three-year spells at Barcelona and Bayern respectively.
His decision to stay put will only boost City's chances of signing Lionel Messi, who is set to leave Barcelona upon the expiry of his contract next summer.
Messi and Guardiola enjoyed great success in their time together at Barca, winning three Spanish titles and two Champions League crowns, and the former could therefore be tempted to reunite with his old manager.
After signing the extension at City, Guardiola said: ”Ever since I arrived at Manchester City I have been made to feel so welcome in the club and in the city itself- from the players, the staff, the supporters, the people of Manchester and the chairman and Owner.
“Since then we have achieved a great deal together, scored goals, won games and trophies, and we are all very proud of that success.
“Having that kind of support is the best thing any manager can have. I have everything I could possibly want to do my job well and I am humbled by the confidence the owner, chairman, Ferran (Soriano) and Txiki (Begiristain) have shown in me to continue for two more years after this season.
“The challenge for us is to continue improving and evolving, and I am very excited about helping Manchester City do that.”
City chairman Khaldoon Al-Mubarak added: “It is testament to the qualities of the man that Pep Guardiola's passion and intelligent approach are now woven into the very fabric of the football we play and our culture as a club.
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“That impact has been central to our success during his tenure and it is why I am delighted that he shares our view that there is so much more to be achieved both on and off the field.
“I’m sure all City fans share my delight in this new agreement and in anticipating the exciting opportunities that, with continued hard work, are there to be taken.”