After guiding Malaga to the last eight of the Champions League, the Chilean has confirmed it is almost certain he will be in charge at the Etihad Stadium next season
The Chilean has long been touted as the replacement to Roberto Mancini, who was sacked earlier in May, and already confirmed he would be leaving the south Spain side at the end of the season.
Pellegrini guided Malaga to fourth in La Liga this season as well as the quarterfinals of the Champions League, and it looks almost certain he will be in charge at the Etihad Stadium next season.
"I have a verbal agreement with them and I hope it is carried out," he told television channel Canal Sur.
The 59-year-old confirmed nothing has been signed yet but it looks to be a matter of time before he puts pen to paper.
"As of today, I [haven't yet] a signed contract," he added.
"It is true that Manchester City have shown a lot of interest that I become their coach and I have had conversations with them.
"Until things have been signed, you cannot say everything is completely done."