The 59-year-old Chilean has been widely tipped to be the next man in charge at the Etihad Stadium, with reports suggesting that Mancini could be out of a job within the next 48 hours.
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Despite the strong rumours that accelerate by the day indicating that Pellegrini is set to be announced as City's new manager, the current Malaga boss has denied that a deal has been signed.
"I categorically deny that I am the new Manchester City coach, nothing has been signed and no agreement reached," Pellegrini told the club's official website.
"I’ve been fortunate enough, and very proud, that every year the big clubs are interested in me.
"I have an agreement with Malaga not to talk to anyone and nothing has been agreed with any other outfit. I hope the future of this club will become somewhat clearer in the next few days."
It was reported that Pellegrini has been on City's radar since January, with club officials allegedly meeting with the Chilean's agent earlier this year.