He will extend his stay at the Etihad through to the end of 2026.
Guardiola's current deal, signed in 2022, was due to expire at the end of this season. The new contract reportedly includes an option for a further year, according to The Athletic.
The 53-year-old, who joined the club in 2016, has led City to six league titles, two FA Cups and a Champions League triumph as part of their treble win in 2023, along with a FIFA Club World Cup and four League Cups.
The Spaniard managed boyhood club Barcelona from 2008-12 and spent three years in charge of German giants Bayern Munich, winning three league titles at each club, before joining City.
City are second in the Premier League table, five points behind Liverpool after 11 games.