City had to fight back from 2-0 down against Aston Villa in the second half, but three goals in the space of five stunning minutes -- including two from substitute Ilkay Gundogan -- set off the party, with fans pouring onto the field at the Etihad Stadium at the final whistle.
City have now won four of the last five Premier League titles and their victory ends Liverpool's hopes of a unique quadruple of trophies.
"Four Premier Leagues, these guys are legends already, people have to admit it. This group of players are absolutely eternal in this club because what we achieved is so difficult to do," Guardiola said.
Liverpool, who face Real Madrid in the Champions League final in Paris next week, had also found it hard to get their business done at Anfield against Wolverhampton Wanderers but late goals from Mohamed Salah and Andy Robertson earned them a 3-1 win.
Juergen Klopp's side never went top of the 'live table' during the afternoon of drama but until City's revival the destiny of the title was hanging tantalisingly in the balance.
Tottenham Hotspur comfortably secured the fourth Champions League spot with a 5-0 win at relegated Norwich City while North London rivals Arsenal had to settle for fifth spot despite crushing Everton 5-1 at the Emirates Stadium.
At the bottom, Burnley joined Watford and Norwich in heading down to the second tier Championship.
A fine header from fullback Matty Cash had put Villa 1-0 up at the break and the nerves of the City fans worsened after Brazilian former Liverpool midfielder Philippe Coutinho doubled the advantage in the 69th minute.
At that stage Liverpool were being held 1-1 by Wolves and were still in second spot but a goal for them at Anfield would have put them in pole position.
GUNDOGAN DOUBLE
But by the time Liverpool did take charge of their game, City had fought back and blown away all the fear of a final-day collapse in five blistering minutes.
German Gundogan headed in a Raheem Sterling cross before Spanish midfielder Rodri drove into the bottom corner. Gundogan then completed the turnaround, tapping in a low cross from Kevin De Bruyne at the back post.
City fans poured on to the field at the final whistle with no sign that the novelty of being champions of England is wearing off.
"The last game is always special, a lot of emotion. Aston Villa gave everything but the first goal changed everything. We had to handle it," said Guardiola whose fourth triumph at City makes him the most successful foreign manager in terms of English league titles.
"When you win the Premier League in this country four times in five seasons it is because these guys are so, so special. We will be remembered.
"Winning at home in front of our people is the best. The moment we equalised we had the feeling we had the chance to score the third," he added.
Liverpool's afternoon had also started with a hiccup as they fell behind to a third-minute Pedro Neto goal before Sadio Mane pulled the home side level in the 24th.
'ABSOLUTE BEST'
Although the late efforts from Salah and Robertson made sure the Merseysiders finished their domestic campaign with a win, City's late goal rush put paid to any hopes of a second league title for Klopp and his team.
"Congratulations to Man City and Pep Guardiola. Thank you to Aston Villa and Wolverhampton for making a proper game of it," said Klopp.
"It’s not the result we wanted. It was a bit of a rollercoaster," added the German.
"You can’t do more than give your absolute best and that’s what the boys did again. We chased the best team in the world to the wire, that’s absolutely special. We’ll build a team again and go again."
Spurs made sure of a return to Champions League football with an easy win at already condemned Norwich with Son Heung-min scoring twice to ensure he finished joint top scorer this season with Salah on 23 goals.
Dejan Kulusevski also struck twice for Antonio Conte's side with Harry Kane finding the target as well.
At the other end of the table, Burnley were relegated after they lost 2-1 at home to Newcastle United while Leeds United secured survival with a 2-1 victory at Brentford, who finished their game with nine men.
Norwich and Watford had already been relegated before the final day.
Manchester United will play in the Europa League after finishing in sixth position despite a 1-0 defeat to Crystal Palace in Ralf Rangnick's final game in charge.
West Ham United will have to settle for Europa Conference League action after they failed to take advantage of United's slip, losing 3-1 to Brighton and Hove Albion.
