The Athletic reports City's players are losing faith in Guardiola following the shock Champions League exit to Lyon.
The Sky Blues were heavy favourites to reach the semi-finals of the competition for the first time in Guardiola's reign, but were beaten 3-1 by the Ligue 1 side on Saturday night.
The disappointing season has left some City stars disgruntled with the manager and their trust in Guardiola's tactics for big games is "dwindling".
The report adds the squad did not know how to react after the defeat to Lyon and there was a "funeral atmosphere" in the dressing room.
Players were also astonished at the team selection and the tactics for the match, which saw City change from their usual 4-3-3 formation to a more defensively-minded shape.
The fact so much respect was given to a side who finished seventh in Ligue 1 this season - outside the European places - is said to have left the squad "speechless" and "devastated".