The Sweden international striker had a highly impressive loan spell at Feyenoord last season and has now committed his long-term future to Roberto Mancini’s side
Guidetti was brought to the club in 2009 by Sven-Goran Eriksson, and has since had spells away at Burnley and Feyenoord. After an incredible season at De Kuip last term, that saw him score 20 goals in just 23 appearances, Guidetti made his senior international debut in February.
"I've seen how much the club has turned into one of the biggest in the world," he told City’s official website.
"It's great to be a part of it and to have a management and a club that believes in you is very important. City have shown that and I'm very happy.
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"I've been here for a long time, since I was young. They're the ones that helped me grow and develop into the player I am today, so I'm very grateful for that.
"There's so many fantastic football players and staff and people working here, and so all the players teach you new things, all the staff teach you and help you to develop.
"You have the best medical team, you have the best everything. To be at a place that has everything at the best is fantastic."
City have a host of fully-fledged international strikers at their disposal including Carlos Tevez, Sergio Aguero, Mario Balotelli and Edin Dzeko.
Despite all the competition to even earn a place on the bench, Guidetti is determined to prove his worth to Roberto Mancini.
"Who doesn't like competitive? If everything was easy it wouldn't be fun would it?" he added.
"I know I'm going to learn so much from all the great strikers that are here. I'm only young, so if I can train every day with the best strikers in the world then it's going to help me, because if I can watch how they are in training, I can try to do the same and hopefully improve.
"I like the competition. I think that it will bring out the best in everyone."
Guidetti was delighted to be included in City's 25-man Champions League squad this term and is pushing for a place in the squad after recovering from injury.
He said: "It's close [full fitness after the injury] and it was a great honour to be part of the Champions League squad.
"I hope we can kick off the Champions League in a great manner and go on to the final stages and I hope we can do something good at that because we have a fantastic team and fantastic management."
"Of course it would be to develop and try to become as good as I can and try to start playing for City regularly - more first team football every week.
"Just to play in front of the great fans here and try to maybe bring home some medals. That would be a dream for me, to start playing for Manchester City."