The European Champions had to come from behind after Youssef En-Nesyri’s towering first-half header gave the Spaniards the lead.
City were far from their slick best, but hit back to force the game to penalties through Cole Palmer’s equaliser.
Guardiola’s men were then perfect from the spot and prevailed 5-4 in the shootout after Sevilla defender Nemanja Gudelj smashed against the bar.
Should City win the Club World Cup in December, it would complete Guardiola’s honours list since arriving in England, which already includes five Premier League titles, four League Cups, two FA Cups and the club’s first Champions League.
“We are really pleased for the club to win this,” Guardiola said. “We miss just one to finish the full circle and have all the titles we can have.”
Guardiola has bemoaned his side’s lack of preparation for the new season, which showed under the baking heat in the Greek capital.
City badly missed the creative presence of Kevin De Bruyne and Bernardo Silva through a combination of injury and illness.
A four-month absence for De Bruyne due to a serious hamstring injury has exacerbated the loss of firepower offered by Ilkay Gundogan and Riyad Mahrez since last season.
West Ham’s Brazilian international Lucas Paqueta has been linked with a move to the Etihad, and this performance may serve as further proof City need to strengthen before the end of the transfer market.
“We are not in the best moment, I would say,” Guardiola acknowledged. “Football in these games, in this period, is a (toss of a) coin.”
Sevilla began their La Liga season with a disappointing 2-1 home defeat to Valencia.
But just as they did last season in lifting a seventh Europa League despite a 12th-placed league finish, they rose to the big occasion.
– Sevilla’s missed chance –
Josko Gvardiol was making his first start for City since a 90 million euro ($99 million) move from RB Leipzig.
But the Croatian international was beaten to Marcos Acuna’s cross by En-Nesyri, who bulleted a header in off the post.
City’s sluggishness was in evidence again at the start of the second-half, when Lucas Ocampos skipped past Kyle Walker’s desperate lunge to set up En-Nesyri with a golden chance to double Sevilla’s lead.
The Moroccan striker was one-on-one with Ederson but fired straight into the Brazilian goalkeeper’s legs.
“When we had the chances to score the second goal, we didn’t take them,” said Sevilla boss Jose Luis Mendilibar.
Sevilla were left to rue that miss as City hit back against the run of play on 63 minutes.
Mahrez’s departure has opened the door to City academy graduate Palmer to the first-team, and the England under-21 international, who also scored against Arsenal in the Community Shield, is taking his chance.
Rodri was City’s hero with the only goal in the Champions League final against Inter Milan, and the Spaniard this time provided the assist with a perfectly measured cross for Palmer to cushion a header past Yassine Bounou.
En-Nesyri was guilty of another wasted one-on-one moments later as Ederson flew off his line to make a block.
Erling Haaland had scored twice in all of his previous three appearances against Sevilla, but the Norwegian barely got a sight of goal before the spot-kicks.
Bounou was playing what is expected to be his final game for Sevilla before a move to Saudi side Al Hilal.
However, there was no perfect ending for the Moroccan international as Haaland, Julian Alvarez, Mateo Kovacic, Jack Grealish and Walker all held their nerve to score in the shootout.
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