Pressure mounted on Manchester City in their bid to ensure qualification for the Champions League as Callum Hudson-Odoi's late winner sealed a 1-0 victory for Nottingham Forest in a top four shoot-out on Saturday.
City must now focus on fighting for a place in next season's Champions League after a forgettable campaign.
Even that usually routine target is far from assured for Guardiola's team following their ninth league defeat this term.
Hudson-Odoi struck late to give his side a home win and boost their own chances of a top-four finish and prized place in next year's Champions League.
The 24-year-old winger picked up a glorious pass from Morgan Gibbs-White before running into the box and driving the ball past City goalkeeper Ederson at his near post from a tight angle in the 83rd minute.
In a game of few chances, Guardiola's visiting team came closest when Nico Gonzalez's long-range shot scraped the outside of the post in the first half, while Hudson-Odoi saw a curled effort pushed onto the woodwork by Ederson after the break.
"I'm absolutely buzzing with the goal," said Hudson-Odoi after his contribution secured Forest a first league win over Manchester City since 1997.
"We fought every battle, every ball and I’m happy we got the win for the fans. Look at the crowd, they’re amazing," he said as most of the 30,000 fans sang and danced at the final whistle in a sun-bathed City Ground beside the River Trent.
The result kept this season's surprise team Forest in third place on 51 points with 10 games left, putting them in a strong position to secure a spot in Europe's elite competition for the first time since the mid-1990s.
With six titles in the past seven seasons, City have rarely had to worry about their place in the Premier League's top four in the Guardiola era.
Yet they left the City Ground looking anxiously over their shoulders after a first league loss to Forest since 1997.
Fifth-placed Chelsea, just one point adrift of City, will go above the fourth-placed champions if they beat lowly Leicester on Sunday.
Finishing fifth could still be enough for City to reach Europe's elite club competition depending on the results of the English clubs who remain in continental competitions this term.
Manager Guardiola told TNT Sports: "They defended really well and we could not find the precision in the last moment (in front of goal). We could not do it.
"We're going to prepare for the next game. We have 10 games to qualify, 10 finals."
Meanwhile, England defender Stuart Pearce was sent well-wishes by former club Nottingham Forest during their Premier League match on Saturday after reportedly falling ill last weekend.
Pearce, 62, suffered a medical emergency on board a flight to London from the United States. After he received treatment, a decision was made to make an emergency landing in Canada where Pearce is recovering in the hospital.
Pearce calls matches for British radio station talkSPORT alongside commentator Sam Matterface, who was at the City Ground for the match between Forest and Manchester City — two of Pearce's old clubs.
“I spoke to him yesterday, he’s in great spirits,” Matterface ahead of the game. “He isn’t 100 per cent, that is definitely the case, but he is in the right place, he is in the hospital. They are dealing with it.”
A message reading “Get Well Soon Stuart” was displayed on the big screen at the City Ground after three minutes of the Forest-City game.
