The Algerian has chipped in with seven league goals and four assists this season, including one in the 4-1 win at Brighton and Hove Albion that sealed the title, and said he would not shy away from the competition for a starting spot.
"I'm very happy here," Mahrez told reporters. "I'm not going somewhere else because I don't play.
"It's part of the game. I need to be strong, stay strong. It's part of my personality, I never hide from things."
Mahrez, who was the Professional Footballers' Association player of the year when he led Leicester City to the 2015-16 league title, said he knew it would be difficult to earn his spot in Guardiola's record-breaking team.
City won the title last season with a record 100 points, winning 32 games and scoring 106 goals in the process.
"It's not easy to come to a team who are settled and have the players who play," Mahrez added. "That squad did everything last season.
"I knew it wouldn't be easy in my first year but I'm very confident in myself and have no doubts about my quality."
City, who also won the League Cup earlier this season, have the chance to seal an unprecedented English domestic treble when they take on Watford in the FA Cup final on Saturday.
(Reporting by Rohith Nair in Bengaluru; Editing by Ian Ransom)
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