“Professionally, I am living my last hours in Malaga,” he said at a function to mark his achievements with the club in a report carried by Spanish Sports daily AS.
He added: “On Sunday I will manage my last game as Malaga coach at La Rosaleda.
“It will be a very emotional occasion and we hope to leave with the club qualified for Europe, with the mission completed and with the misfortune that the project changed.
“The agreement with the club has been gratifying and satisfactory. Everyone has the right to continue on their on path.
“I am not looking for economic ambitions but a sporting project that allows me to feel fulfilled.”
Pellegrini has been a reported long-term target for City, having previously won plaudits for his work at two other Spanish clubs in Real Madrid and Villarreal.
The plum City job is available following Roberto Mancini’s sacking last week.
Pellegrini, who has been in charge of Malaga since November 2010, guided the club to their highest ever league finish last season as Los Boquerones qualified for the Champions League for the first time.
And despite financial problems that forced them to sell a number of key players before the start of the this season, Pellegrini’s men remarkably reached the quarter-finals of Europe’s premier club competition, only just missing out on the semi-finals after conceding two controversial late goals against Borussia Dortmund.
However, the club are currently banned from participating in European competition next season pending an appeal to the Court of Arbitration for Sport due to overdue debts owed to employees, other clubs and tax authorities.
Later Wednesday, Malaga confirmed the Chilean would be leaving.
Coach Manuel Pellegrini will leave the club at the end of the season as he has already confirmed to the media,” said a club statement.
Although he has two years left on his contract, he said there are ‘sporting reasons’ behind his decision.
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