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"He announced to us that he doesn’t want to extend his contract with Manchester City," Guardiola told a press conference.
"He has one more year and after that, he doesn’t want to extend. We want it but he doesn’t want to extend it so I imagine he wants to play in other places."
Garcia left Barca's La Masia academy three years ago and has since broken into the first team at City but the Catalans want to bring him back to Camp Nou and see him as the long-term successor to Gerard Pique.
City’s director of football Txiki Begiristain was set to sit down with the player's representatives to discuss a new deal before the Covid-19 outbreak.
According to sources in Spain, Garcia was consideringhis future because of Guardiola's uncertainty at the Premier League club. The City boss is currently in the final 12 months of his contract at the Etihad Stadium and has so far refused to say whether he will commit to a further extension.
In July, Guardiola said that he was confident that Garcia would sign a new long-term deal but Barca remain convinced they can persuade him to return.
City have been short of defensive options since former captain Vincent Kompany left at the end of his contract in the summer of 2019.
And the issue became a bigger problem when Aymeric Laporte missed five months of the season through injury,while the form of Nicolas Otamendi and John Stones has dropped.
Garcia has established himself as a regular in Guardiola's line-up since Project Restart, featuring in the Premier League clash with Liverpool and FA Cup semi-final against Arsenal and is expected to line-up alongside Laporte against Real Madrid.
City have already acted to address their defensive problems for next season by bringing in Bournemouth defender Nathan Ake in a deal worth an initial £40 million ($53m).
He is not expected to be the only defensiveacquisition with the club also looking at Napoli’s Kalidou Koulibaly and Sevilla’s Diego Carlos as they try to close the gap on Liverpool having failed to mount a Premier League title challenge in 2019-20.
But the loss of Garcia will be a huge blow with the defender seen as having a big future at the club.