City produced a sensational comeback to secure an impressive 2-1 victory over the La Liga giants in the first leg of their last-16 tie at the Bernabeu.
Despite being the stronger side for much of the game, City fell behind to an Isco goal on the hour mark before Gabriel Jesus headed home Kevin De Bruyne’s cross to equalise in the 78th minute.
And De Bruyne completed the turnaround five minutes later when he stroked home from the penalty spot after Dani Carvajal fouled Raheem Sterling in the area.
Guardiola admitted he will enjoy the victory but recognised that his side still have a lot of work to do to secure progression to the quarter-finals.
“I’m so proud of course,” the City boss told BT Sport after the match. “We’ll enjoy the moment, it’s just the first step – we have another game, it’s not over.
“We will enjoy it of course, will enjoy the moment with a good dinner and on Sunday, we have a [Carabao Cup] final.
“We’ll keep going in the Premier League and then prepare for the second game against Madrid.
“I would say, we were (playing) better when we conceded the goal that we shouldn’t have conceded and when they were better, we scored a goal. That’s football.
“We have to improve so we can’t give them the goal we conceded. Maybe in the future we will grow.”
Guardiola raised eyebrows with his team selection before the match as he left Sergio Aguero, Raheem Sterling, David Silva and Fernandinho all on the bench.
He also chose to use Jesus on the left wing with De Bruyne and Bernardo Silva operating as City’s most advanced players.
However, the decisions paid off as the Spaniard became just the second manager to win two Champions League away games against Real Madrid and the first to do so with two different clubs.
On his tactics, Guardiola added: “(It worked) because we won – it doesn’t count in that way.
“The important thing is the way we played, so we came here to try to win the game and we did it in this stadium. For the first part, it’s three points.
“If one team can overcome the situation for experience, for everything is this club, but of course a good result.
“We couldn’t score goals the previous two times away so we did it – it’s a good one.”