Alvarez, 22, was among City’s scorers in Sunday’s 4-0 win over Chelsea in the FA Cup, along with Riyad Mahrez who netted a double with Phil Foden grabbing the other.
The City forward was preferred up front from the start to Erling Haaland for the first time since the World Cup.
Alvarez has made 13 Premier League appearances this season but only three league starts, while he has played 22 times in all competitions.
“I miss this happiness, before the World Cup he was a bit down he didn’t play much,” Guardiola told reporters.
“Happens the World Cup, today Julian feels, Riyad as well, Bernardo, the way we went there, how aggressive we were. We were contaminated, addictive for the people from behind.
“He had the personality to score a goal, he played really well. I said many times, now still we are in four competitions, we need all the squad.
“If everyone is humble to accept the minutes to help the team, they will be more than welcome to play for this fantastic club.”
The Catalan boss also heaped praise on Mahrez, who also scored the winner in last week’s 1-0 league win over Chelsea.
“The quality of Riyad is everything. He loves to play football, he helped us to play the game,” he said.
“It was really good. It was a fantastic free-kick. He played an outstanding game. He never lost his love. He loves to play football. The way he is training now and playing was exactly the same in Abu Dhabi. Riyad in important games is fantastic.
“The last game he didnt start at Stamford Bridge and the impact he had was incredible. When they play in this way, and maybe complain [about not playing every game] I say yes, youre right.
“Before, he cannot complain because he wasnt playing at the level he is now. Its not just about quality, it’s more in football, you have to do more. [But] now since we came back for World Cup, he is playing really, really well.”