Aguero, who returned from a four-month spell out with injury in Saturday’s 1-0 win over Arsenal, has entered the last 12 months of his existing deal.
The Argentine has scored 254 goals for City and been a major part of four Premier League title triumphs, including his famous last-gasp winner in 2012.
However, Guardiola, who is also in the final season of his deal, believes the 32-year-old needs to prove his fitness and form in the coming months.
“The important thing is that Sergio comes back in good physical condition, starts to get his rhythm, doesn’t get more injuries and plays good,” Guardiola said.
“We know what he means for us, we know how we appreciate him, but now he has to show like every one of us, me first, that we deserve to continue here and playing good and winning games.”
Aguero played a key role in City’s goal against Arsenal, driving forward to feed Phil Foden, with Raheem Sterling finishing after Bernd Leno could only parry the midfielder’s shot.
But he was also involved in a moment of controversy in the second half when he put his arm on the shoulder of assistant referee Sian Massey-Ellis.
The image provoked a wave of criticism of the striker, but Guardiola defended his player’s actions.
“Come on guys. Sergio is the nicest person I ever met in my life,” he added. “Look for problems in other situations, not in this one.”
