The Bosnian had been expected to leave the Premier League champions at the end of last season but is now poised to extend his stay at the Etihad
Goal exclusively revealed on Sunday that the Bosnian and Joe Hart are to be the next first-team pair to have their futures at the Etihad Stadium secured, after a busy summer of consolidation from the Premier League champions.
Dzeko played the majority of City's 2-0 Premier League win over Newcastle on Sunday, setting up David Silva for their first goal with a sublime backheel, and Pellegrini says that the performance showcased why they want him to stay.
The Chilean told the press: "He finished last season playing very well and was one of the best players in this game. He worked hard and won a lot of aerial duels. It was a complete game from him.
"It's not strange for me to see him play like that - he finished last season playing very well. He has grown. He's a team player.
"I'm very happy for him. That's why he is renewing his contract here - he has a very important duty in our team.
"I don't think it's 100 per cent finished but, yes, he will renew his contract. He's a very important player for us."
Stevan Jovetic played alongside Dzeko from the start at St James's Park, with Sergio Aguero coming on to score the late second, while Alvaro Negredo is out injured – and Pellegrini says that all four are key figures for his team.
"It is important that we have four top strikers because we have so many games in four competitions," he noted.