First-half goals from Saints pair Sekou Mara and Moussa Djenepo stunned the eight-time winners on an extraordinary evening at St Mary’s.
Guardiola once again began with Erling Haaland and Kevin De Bruyne on the bench ahead of Saturday’s Manchester derby at Old Trafford.
But, unlike on Sunday when the influential pair were not required in a thumping 4-0 FA Cup victory over Chelsea, the decision backfired as they were unable to prevent City suffering elimination after coming off the bench in the second period.
Manager Guardiola felt his Premier League champions were destined to struggle on the south coast regardless of the team he picked.
He said: “Who knows whether with Kevin and Erling it would have been different? I don’t know it.
“We tried to do our best and we rotate the team when we played against Chelsea after the Premier League and it’s good.
“I understand how this business works. Always we try to have everybody involved and everybody has to do it but today was not the case.
“I had the feeling today it doesn’t matter what line-up I am selecting, we are performing this way. Don’t ask me why. This is my experience.
“It doesn’t matter today the line-up we choose, it would happen because we were not here. And that’s why when this happen, they deserve it.”
City began the match as strong favourites but failed to register an attempt on target across the 90 minutes.
Battling underdogs Southampton will face Newcastle in their first League Cup semi-final since going on to finish runners-up in 2017.
“The best team won,” continued Guardiola. “They were better. We had a bad night and we didn’t play good.
“We didn’t perform well and to win games – I’m not talking titles – you have to deserve it.
“When I win something I want to deserve it and today was not the case, that’s why Southampton deserve to be in the semi-finals.
“Today was not even close to what we are.”
France Under-21s forward Mara swept home Lyanco’s cross in the 23rd minute to claim his first Southampton goal, before Djenepo swiftly doubled the advantage with a speculative effort from range which caught out City keeper Stefan Ortega.
Having begun his reign with four successive Premier League defeats, manager Nathan Jones felt the remarkable result answered some of his critics, including Havant & Waterlooville manager Paul Doswell, a Saints fan, who recently questioned his appointment.
“I’m really pleased with the performance,” said Jones. “I thought we were excellent as a team.
“We were aggressive, we were organised, we went after the game, it wasn’t a smash and grab
“I’m proud of the players and proud of the staff. I’ve had people calling me out, I’ve even had non-league managers calling me out saying I’m not good enough.
“It’s a proud moment for me. To be on the same level as him (Guardiola) is wonderful, it’s what I’ve worked very, very hard over my 33-year career to do.
“I’ve believed I’ve earned the right to be here. Whether people think I’m good enough or not doesn’t really affect me because I’ve been questioned at every level I’ve been at and I like to respond.
“It’s been tough but it’s what you’re paid for as a manager.”