The daily newspaper the Telegraph claims that Guardiola has given the thumbs up to signing the midfield playmaker and has told the club to wrap up a deal.
The 25-year-old suffered a dislocated knee earlier this month and will miss Euro 2016 this weekend. Gundogan is also expected to miss the beginning of next season.
The Injury put his proposed move to the Premier League in doubt and caused Dortmund to postpone contract negotiations.
The Daily Mail newspaper claims that a four-year deal has been struck with the 25-year-old. The report goes onto state that City have agreed a €26 million deal for Gundogan.
Gundogan has seven assists and three goals in 40 appearances for Dortmund this season.