Despite their impressive domestic success since the Abu Dhabi-backed takeover in 2008, City have yet to progress beyond the semi-final stage in Europe's elite competition and Guardiola has suggested previously that they are not ready to win it.
Speaking on Monday, he conceded they are a long way from matching the continental success of the likes of Liverpool and Manchester United, who have eight titles between them, even though he insists they are eager for success.
"We could win it and make another step. You need 20 or 50 years. We can make a partial step forward but to compare with those kinds of teams, one silverware doesn't change it. We are teenagers in this competition," he said.
"It's not an excuse - we want to win it, we push ourselves and it will be not good if we don't go through. You have to dream, you have to point as high as possible but there are a lot of teams thinking the same: United, Tottenham are there. We spoke many times with the players and say you have to have the desire to compete with the best players in Europe."
Guardiola is happy to take a lead into the game at the Etihad Stadium, having lost 3-0 to Liverpool in the quarter-final first-leg last season, but he is determined not to allow for complacency.
150 - Raheem Sterling's second goal was Manchester City's 150th Premier League goal at the Etihad under Pep Guardiola. Flurry. pic.twitter.com/B1bk7RRRBg— OptaJoe (@OptaJoe) March 9, 2019
"I prefer this scoreline than last time at Anfield when we played at 3-0 down. I prefer this score. We still have a job to do," he said.
"We have a tendency when we see a draw to say who is going to win the second one. One week ago, we didn't expect the results at Paris Saint-Germain or [Real] Madrid would happen. Many things can happen in 90 minutes in this kind of competition.
"I'm sitting here thinking we still have work to do. That is my feeling.
"This competition is judged so that when you go out in the last 16 it's a big disaster. This is a competition that punishes you a lot for your mistakes. We are lucky to be here and 3-2 up."
"If people think Real Madrid going out makes it easy, they don't understand the competition," he said. "I thought they are the favourites because I thought, 'if they can win three, they can win four', but there still remains some incredible clubs. They are of a similar level to Real Madrid.
"Analyse the last one or two months, we are better than [Schalke], but this is one game. It's completely different. Everything is open. That's why we have to be focused. We saw it last week with United, who showed incredible character. Nobody expected it. And a young Ajax team who went to Madrid."