Marc Sands, marketing director Guardian Newspapers, has called the review which marks the end of the paper's association with Ogilvy & Mather.
O&M will not be repitching for the account.
Sands has drawn up a shortlist of agencies. Fallon, Mother, BMP DDB and Malcolm Moore Deakin Blazye will compete for the task.
O&M scooped The Observer's prestigious account in 1997 following a four-way pitch against Abbott Mead Vickers BBDO, WCRS and BMP DDB.