Borrell has been at City since 2014 after spells with Barcelona and Liverpool.
The 51-year-old Spaniard joined Guardiola’s coaching staff following his compatriot’s arrival at the Etihad Stadium in 2016.
Guardiola’s previous assistant Lillo left the Premier League champions last month to take charge of Qatar Stars League club Al Sadd.
City also revealed Enzo Maresca has rejoined the club’s backroom team.
Maresca, formerly head coach of City’s elite development squad, joins Guardiola’s staff a year after leaving City for a short spell as Parma manager.
“Manchester City are delighted to announce that Enzo Maresca has returned to the club as part of Pep Guardiola’s backroom staff,” a City statement said on Tuesday.
“Rodolfo Borrell, who has been at City since 2014, will step up to the role of assistant coach in place of the recently-departed Juanma Lillo.”
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