The 25-year-old has missed the last two games after limping off with a hamstring injury in our 2-0 defeat to Tottenham Hotspur, but has made an impressive recovery to put himself in contention for a return at the Santiago Bernabeu.
“Raheem is fit,” said Guardiola at his pre-match press conference on Tuesday evening.
"His natural physical condition, his regeneration, is amazing. He said to us he could play the West Ham game or the previous one against Leicester.
"The doctor said be careful because of the time. Muscular injuries are always three weeks or month and after 15 days he wanted to play. That is a good sign.
"He is fit. He is ready."
City travel to Madrid winless in four games against the Spanish giants, who have been crowned champions of Europe in four of the last six seasons.
'The king of this competition’ was how Guardiola referred to them ahead of Wednesday’s showdown, as he acknowledged his players have a big opportunity to prove their Champions League credentials in the tie.
But, having bowed out in the quarter-finals to Liverpool two years ago and Spurs last season - games in which City had goals disallowed - the boss admitted you do need the rub of the green in knockout football.
“You need to play good, first of all,” he explained.
“You have to be strong and be quality and be many things. And you need luck, yes.
“In the knockout stage, the decisions at certain points are important. But we cannot control that.
“What we can control is to play as good as possible and then we will see. It is what it is.
“In this competition we saw last season and in previous ones, when we played Liverpool, you play for 180 minutes against quality opponents and in some moments the decision takes it off you.”
Despite that, Guardiola is adamant he will not be losing sleep over situations beyond his control.
They are obstacles to be overcome, he says, and he called on his players to show the same mentality as they did in the 1-0 win over Leicester City, when we bounced back from the disappointment of Sergio Aguero’s missed penalty to claim all three points.
“You have to overcome things, like we did against Leicester,” he added.
“We missed a penalty again but the reaction after that was exceptional. In this kind of competition that’s what we need.
“We have to have incredible concentration in our game plan and what we have to do and of course, try to be a little lucky in the decisions we cannot control.
"But I am not going to be worrying about that or be talking to the players, because we cannot control it."