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Nineteen points separated the two sides at the start of the afternoon.
Second-placed City needed a victory to keep the pressure up on Premier League leaders Arsenal, who faced Leeds United later on Saturday afternoon.
While Guardiola’s side have a game in hand over the Gunners, defeat against Liverpool would make the task of catching Arsenal even more difficult.
Erling Haaland, the Premier League’s top scorer, didn’t travel with the City squad due to an injury.
Meanwhile, Liverpool’s record signing Darwin Nunez was only fit enough to make the substitutes’ bench.
City were on top early on, pinning their opponents back for most of the opening 15 minutes.
Liverpool took the lead through Salah
However, it was Liverpool who opened the scoring in the 17th minute when Mohamed Salah produced an emphatic finish following a Liverpool counter-attack.
Riyad Mahrez had a chance to level the scores shortly afterwards but blazed his strike over the crossbar.
Alvarez equalises for City
Jack Grealish made a vital interception which may have prevented City from going 2-0 down. Less than a minute later, the £100 million winger provided the assist for Alvarez to equalise.
Watch the goal here:
Video: Pep Guardiola’s celebration goes viral
Guardiola got so carried away that he ended up celebrating in front of a couple of Liverpool’s subs.
Watch the footage here:
Now let’s check out some of the best reaction to the clip:
Man City took the lead early in second half
City then went 2-1 up early in the second half through Kevin De Bruyne.
The Belgian midfielder converted Riyad Mahrez’s cross following some poor team defending from Jurgen Klopp’s men.