City have been in great form and are coming off the back of a 7-2 thrashing over Stoke City on Saturday.
"I knew before we played and I know now - they are one of the best teams in Europe at the moment", he added.
Former Barcelona and Bayern Munich manager Guardiola said his team exhausted but that he was proud of his players for holding on for a win to maintain their 100 percent record in Group F.
On Saturday, his team were three goals up after 27 minutes, with Gabriel Jesus touching in the first from Kyle Walker's cutback, before Sterling tapped in the second and then set up David Silva to steer in the third.
Before the game Guardiola had lavished praise on Maurizio Sarri's Napoli, who are top of Serie A with eight wins from eight games, and afterwards he made the surprising claim they were the best opponent he had ever faced.
Napoli had a glorious chance to pull one back 64 minutes in when, after one risky pass too many at the back, Fernandinho was caught out and Mertens took advantage by squaring for Marek Hamsik. "Napoli, for the way they play, of course they can win the league".
Midfielder of Turkish origin Ilkay Gundogan will have to continue waiting for his first Champions League start of the season as he also starts on the bench.
Both sides have been in devastating form in front of goal, scoring 71 goals between them this season.
Still, there was defeatist talk in the build-up by Napoli president Aurelio De Laurentiis, who said City was such a favorite that Sarri should rest players ahead of a big Serie A game against Inter Milan at the weekend.
"With some of the goals we were running up, the boys were thrilled at how we had scored", said centre-back John Stones.
And Sportsmail's JACK GAUGHAN was on hand to provide you with some things we learned during the win for Pep Guardiola's men.