The former Everton and Arsenal midfielder has been working under Guardiola since 2016, and recently revealed that he had turned down offers to take over as manager elsewhere to stay with the Premier League champions.
The 37-year-old Spaniard was heavily linked with a return to Arsenal when Arsene Wenger left the club last year but the job eventually went to Unai Emery.
Guardiola has always maintained he is happy as City manager, and is contracted until 2021, but when he does move on he believes Arteta would be good enough to step up.
Guardiola said of his countryman: “He’s an incredible human being, with incredible values about what it means in the locker room and to be together.
“He is already an incredible manager and he’ll have incredible success in his future.
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“I’m pretty sure (he could succeed me), yes. But he decided to stay – thanks – but everyone decides what they’ll do in the future. Sooner or later it’s going to happen.
“He’s a young young manager but he has experience already to handle big players and teams.”
Arteta, who also played for Paris St Germain, Rangers and Real Sociedad after coming through the Barcelona youth ranks, moved straight into coaching under Guardiola after hanging up his boots three years ago.
Guardiola says he and Arteta share a footballing philosophy.
The former Barcelona and Bayern Munich boss said: “He has incredible work ethic and he has a special talent to analyse what happens, and to find the solutions.
“We talk a lot about what he believes and feels and so on. He has helped me a lot, especially in the first year. He knew the Premier League, like for example in games against Stoke or whatever.
“He can tell me the players we will face better than myself, because he played against them and was in the Premier League for 10 or 11 years. That’s a long time and that is why he helped me a lot, and he still helps me.
“He’s a guy who has this ability to see what happens. When you’re off the pitch and on the pitch it’s easier, he can do it. We see the football in really quite a close way.”
City will hope to get back to winning ways in the Premier League on Saturday following last week’s shock defeat at Norwich as they host bottom side Watford.
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