The 19-year-old took full advantage of Sergio Aguero being rested to score three times in the FA Cup fourth-round tie at Villa Park on Saturday, with Raheem Sterling netting the other in a comfortable 4-0 win.
Dzeko and Jovetic joined Serie A sides Roma and Inter respectively at the start of the season and Pellegrini believes Iheanacho is showing that allowing the more experienced pair to go was the right decision.
"Kelechi is a very good young player," the Chilean told BBC Sport.
"We let Jovetic and Dzeko go because I see Kelechi every day and know what he can do. I am very happy.
READ MORE | COMMENT Kelechi a Manchester City star in the making
Sterling wanted to take the penalty which put City two goals up, but it was Pellegrini who insisted on Iheanacho doing the honours from 12 yards.
The manager added: "I told Bacary Sagna to tell Kelechi to take the penalty. I see him take penalties every day, so he was in charge."
The win means City, who are back in action at Sunderland in the Premier League on Tuesday, are still in contention to win all four major trophies they are competing for this season.