The Manchester City boss says the frustration of the quarter-final exit against Lyon in 2019-20 helped his squad reach the final of the competition for the first time last season.
And, as City prepare to begin a new European campaign against RB Leipzig on Wednesday, Guardiola feels his players will be better for having experienced the pain of defeat in the final against Chelsea last May.
“I am pretty sure,” he said when asked if tough moments can help a team progress at his pre-match press conference.
“The players have feelings and soul and it hurts when you cannot achieve. It’s a new challenge to try.
“These guys win three in the last four Premier Leagues and we always have the feeling we can do better.
“It’s something we want but many teams want it too. It depends on many, many things.”
Having reached a maiden Champions League final last season, City have been tipped by many to go one better in Europe this year.
The German outfit are alongside Paris Saint-Germain and Club Brugge in a tricky Group A and the Catalan says it is vital his team get off to a good start at the Etihad Stadium on Wednesday.
“It is the first game in the group stage and to talk about the latter stages we have to deserve to be there,” he added.
“When we start this competition every season and people ask who is the favourite I cannot answer you. It is unpredictable - many strong teams. The group stage is always difficult.
“Leipzig are always very good. They have a strong philosophy - young players, dynamic, physical, strong, playing narrow in all senses.
“One step at a time. Tomorrow it is Leipzig and it is always important to start well, especially at home.”
The Champions League is the only trophy to elude Guardiola during his time at City.
It is a competition he won twice as a manager during his glorious spell at Barcelona, but he is unconcerned by any external suggestions that to not do so again would limit the scale of his achievements in Manchester.
“I accept that [people say I need to win the Champions League],” he said. “Every year is the same.
“If I win the Champions League, I will be happy for the club. If we are not going to do it, we are not going to do it. After people will analyse my period.
“I try to do my best and people will judge my job, like I judge my players. They have done incredible for the last five years.”