Sancho had been with the Manchester City academy since he was 14 and was widely tipped to become the next star in the club.
But due to lack of chances in the senior team, the Englishman joined Dortmund for a fee around £8 million and has gone on to become one of the best players in Europe.
Sancho has since been an England international with 18 caps a reward for his stellar performances at the Signal Iduna.
Sancho’s Dortmund have been drawn against Manchester City in the quarter-final stage of the UEFA Champions League and Guardiola was asked if he regrets selling the 20-year-old due to his meteoric rise to prominence.
"I've said many times, it is not a regret. He decides. He's doing really well," Guardiola told reporters ahead of Manchester City’s FA Cup game against Everton on Saturday.
"Congratulations, he's an exceptional player. He is a national team player with huge quality, doing really well in Dortmund.
"We wanted him to stay but he decided to leave, and when people decide to leave all we can do is [let them] leave.
"I wish him all the best, except when he plays against us. No regrets at all. If he's happy, I'm happy."
When asked what might have been if Sancho stayed, Guardiola said: "Nobody knows. Maybe he stays and we don't play good or better. The life of every person decides what life they lead
