Sterling joined City from Liverpool last summer in a deal which riled the Reds and their supporters.
Widely regarded as one of England’s best talents, Sterling has had a somewhat mediocre debut campaign at the Etihad Stadium with just six goals and two assists in 27 Premier League matches.
Commenting on his performances for Radio Five Live, Lawrenson does not question his raw ability but rather his understanding, suggesting he will never become a top player as he acts on instinct.
“Raheem Sterling does not, and will never, understand the game. He does not realise what he does and how he does it, he is purely reactive and instinctive,” Lawrenson said.
"It is going to be a tough job for Pep Guardiola. Manchester City should be top of the league."
Sterling rose to prominence while at Liverpool and was influential during the Merseyside club’s bid to win a Premier League title under Brendan Rodgers during the 2013/14 campaign.
His pace, directness and trickery made it hard for defenders to stop him in full flow and Liverpool’s high pressing, counter-attacking style certainly helped his cause.
However, with City playing a more progressive game, the 21-year-old has needed to become more patient, time his runs better and provide movement off the ball - three parts of his game that have been lacking.
Incoming boss Guardiola will arguably adopt even more controlling style at City, therefore Sterling’s chances of making a positive impact could be dented further under the Spaniard’s guidance.