A transfer collapsed, however, as City were unable to agree a fee with Leicester.
Reports suggested that Mahrez would be ostracised by the Leicester first team upon his arrival to training, following suggestions that his behaviour had upset his team-mates.
Leicester have revealed that he has now re-joined the group, however, and insist he remains a key part of Claude Puel's squad.
"Riyad remains a greatly valued member of Claude Puel’s squad and is focused, together with his team-mates, on achieving further success with Leicester City," a statement reads on the club's official website.
Following Mahrez handing Leicester a transfer request in view of forcing through a move to City, it was suggested that the 26-year-old would go on strike should a transfer fail to transpire.
Those accusations have been denied by the player, however, in a statement released ahead of Leicester's showdown with City on Saturday.
"Over the past ten days many people claiming to be my friend have spoken about me and things they know nothing about," Mahrez said in a statement.
"Off the back of that many people and journalists have made assumptions without properly checking the story, so I would like to clarify that all those so-called assumptions of why I was absent are completely untrue.
"Myself nor my advisors have ever made any statements about that so all presumptions made are totally without foundation. Leicester City were always aware of my whereabouts and had knowledge of my thinking either directly or via my advisors.
"I have been a part of the Leicester City team that has achieved much success including promotion to the Premier League and being champions of the League.
"My goals have always been the same and I have always given my full 100 per cent when I play for the club, the fans and my team-mates. Those goals remain the same today and in the future and when I am asked to be a part of the Leicester team, rest assured I will continue to give my all."
Guardiola has long been interested in securing a deal for Mahrez, though the fall-out from January's situation may have ended that.
And, while City will host Leicester on Saturday evening, Mahrez will play no part in the fixture.
"I think Riyad will be not available for the Saturday game against Manchester City," Puel told reporters at his pre-match news conference.
"I hope he can get his head right and come back with us and work hard. The best way is to come back and enjoy his football.
"Riyad is a magnificent player. He loves football, he loves his relationship with his team-mates, he enjoys his football. I think he needs to come back, to play and touch the ball.
"He loves his football, it is important he comes back."