Guardiola has been without a formal assistant at City since December last year, when Arteta was appointed as the Gunners' new head coach following the sacking of Unai Emery.
According to Spanish publications Marca and AS, Juanma Lillo is set to assume the position after recently parting ways with Chinese Super League side Qingdao Huanghai.
Guardiola is said to have a good relationship with Lillo, having previously played under the 54-year-old during their shared time at Mexican side Dorados de Sinaloa.
The Tolosa-born coach has a wealth of experience to his name, and has been head coach of 17 clubs throughout his career, including the likes of Real Sociedad and Real Zaragoza.
Lillo's apparent appointment comes after former City captain Vincent Kompany reportedly turned down the opportunity, while ex-Spain international Xabi Alonso was also linked with the position.