Capello branded Guardiola "way too arrogant and presumptuous", claiming he would refuse to compromise on tactics as he wanted to prove City could only win titles with him in charge.
In response, Guardiola said on Friday: "I listen to everything that people say about me, so be careful."
"It's not the first time Mr Fabio Capello has said that. I'm not good enough to ruin Italian football. A big hug to Fabio. A big hug."
However, Guardiola then continued: "I don't want to pretend to be, and naming again one of the big managers, one of the exceptional managers in Fabio Capello, and look arrogant, but we helped raise the bar in the Premier League.
"Teams had to go to the markets and that helps people. People want to do good, people are well organised, have good structures, good decisions, good players everywhere.
"I've been here when I went to Bournemouth in the beginning, and now it's different. And when I went in the beginning in Brighton, and now it's different. And when I went in Fulham in the beginning, and now it's different."