The reigning world downhill champion from Mont Tremblant, Que., finished second in the men's World Cup race in a time of one minute 57.69 seconds.
The silver-medal finish was Guay's 19th-career World Cup podium and moved him just one back of Steve Podborski's Canadian record of 20 top-three results.
"If ever there's a place you want to podium it's Kitzbuehel. It's definitely the Super Bowl of the World Cup," said Guay, who added the result was a nice build-up toward the Feb. 10 downhill race at the world championships in Schladming, Austria. "I've never been on the podium here so second place is great.
"I am already starting to think toward Schladming. My goal obviously is to defend my title. It will be a tall order but I feel like my form line is coming into place."
Guay finished the downhill 0.13 seconds back of Domink Paris, who became just the second Italian skier to win the classic men's World Cup downhill in Kitzbuehel, following in the footsteps of Kristian Ghedina's victory in 1998.
Hannes Reichelt of Austria was 0.36 seconds back in third place.
The Canadian ski team has had plenty of success at Kitzbuehel, just not in recent times.
Ken Read started an incredible win streak with his victory in the downhill in 1980 and Podborski won in 1981 and 1982 before Todd Brooker claimed another victory in 1983. Rob Boyd was the last Canadian man to make the podium in the downhill, finishing third in 1991. Thomas Grandi was second in the slalom in 2004.
Vancouver's Manuel Osborne-Paradis finished 10th on Saturday, while Ben Thomsen of Invermere, B.C., was 17th and Calgary's Jan Hudec was 18th on the 3.3-kilometre course.
"I think in other years when our team has come here we haven't really attacked but this year we had a different mindset," Guay said. "Our team is strong. I like that we are a small team — small but focused. Four guys who can all be competitive."
Paris, who also won in Bormio in December, and teammate Christof Innerhofer now share four downhill victories this season, a record for the Italian team.
"Winning Kitzbuehel is even a bigger achievement (than Bormio)," Paris said. "It's the dream of every downhill racer to win here. When that dream comes true, it's beautiful."
The crowd of about 50,000 included Austrian-born actor Arnold Schwarzenegger, who took a break from a promotional tour to watch the race in sunny conditions.
The victory sent Paris top of the downhill standings with 317 points, closely followed by Aksel Lund Svindal of Norway with 314.
Svindal, who won Friday's super-G, finished ninth and failed to overtake Marcel Hirscher atop the overall standings. The Austrian skipped the race and leads Svindal with 935 points to 876.
Svindal had to wait in the start gate as the previous racer, Peter Fill, crashed. The Italian went into the fences and made an ugly-looking back flip, but escaped unhurt. Later, Johan Clarey of France also avoided injury in a full-speed crash.
"(Waiting) is not ideal, it interferes with your rhythm up there," Svindal said. "But I have been around long enough to know how to handle that. I just didn't ski good enough. I had some mistakes on the bumps but my speed wasn't good enough anyway for a win today."
Following a punishment by the International Ski Federation, Innerhofer had to start the race in 46th position instead of his usual spot among the first 30. The Italian still clocked one of the fastest split times early in his run, but could not keep up the pace on the damaged course after 45 racers. He finished 20th, 1.92 behind Paris.
Innerhofer was fined for ignoring a yellow flag — a stop signal from the jury — during Thursday's final downhill training.
It was the first time since 2006 that the Kitzbuehel downhill was not won by a skier from Switzerland. Didier Cuche won the race four times in the past five years, but has retired.
Patrick Kueng became the highest ranked Swiss skier, finishing in 15th.
— With files from The Associated Press