The former Swansea star endured a disappointing debut season at the Eithad - which ended with surgery for a shoulder problem - and the new boss admits he will be able to move
The 24-year-old winger made just three starts from his 15 appearances for the Etihad Stadium outfit last season following his summer arrival from Swansea on transfer deadline day.
Sinclair was not included in the squad which lost to Arsenal last week and Pellegrini – who has seen the club enter negotiations with West Brom over a move – has confirmed he will allow him to move on loan.
"If he wants to go on loan to play more, we will try to give him [but] only if he agrees," he told reporters in his press conference ahead of City’s opening league clash against Newcastle on Monday night.
"Scott Sinclair is here in the squad, he wants to play more. This squad has important players playing his same position. We will see what happens with him today or tomorrow."
The acquisition of Spanish international Jesus Navas adds further competition for Sinclair, while the arrival of Fernandinho, Alvaro Negredo and Stevan Jovetic gives Pellegrini more depth to his squad.
However, the former Real Madrid coach has not ruled out making further signings before the transfer window slams shut on August 31 as he looks to guide City back to title glory in his debut campaign in charge.
He continued: "We'll see. We don't need to finish today, so maybe not, but maybe yes also."