The Chilean, who was appointed as Roberto Mancini's replacement a fortnight ago, said he was a target for City in 2007, when he was in charge of Villarreal.
But Pellegrini, who was also wanted by Liverpool in 2010, said now was the appropriate time for him to end his nine years in Spain and try managing in England.
He said: "I had twice chances to arrive here before. One was to Manchester City but with the other owners, not these owners. I was very near, after [leaving] Real Madrid, to arrive at Liverpool. It was not the right moment but now it is the right moment."
In 2007, City were bought by Thaksin Shinawatra and brought in Sven-Goran Eriksson as manager. A year later Mark Hughes was installed in charge and then Sheikh Mansour bin Zayed bought the club, leading to a dramatic change in the club's circumstances.
"I won a lot of trophies in South America," he said. "It is impossible for Villarreal to win the title. Malaga are exactly the same as Villarreal. With 96 points [in his sole year there] was the most important league [season] in the history of Real Madrid."
Having taken Villarreal to the last four of the Champions League and Malaga to within seconds of the semi-finals, he was also keen to point his overachievement on the continental stage.
"It is also very difficult for Villarreal to arrive in the semi-final or quarter-final of the Champions League," he added.
Pellegrini has made improving City's record on the continent a priority but has warned that the change at Etihad Stadium will extend beyond the results. The days of frantic spending are over, he suggested.
"It is impossible to buy three, four or five players every year," he explained. "We need a mix with young players. We need to work the Under 21s." It is why, he said, he was worried by neither Mancini's sacking nor chief executive Ferran Soriano's belief City can win five trophies in the next five seasons.
Nevertheless, City have already bought Shakhtar Donetsk midfielder Fernandinho and Jesus Navas, the Sevilla winger - with Pellegrini saying that, although sporting director Txiki Begiristain was involved in the purchases, both players were his choices - and he has now turned his attention to the attack.
"We have two strikers and we need another one," the Chilean said.
With Carlos Tevez sold to Juventus, a decision Pellegrini described as being in the best interests of both City and the Argentine, Sergio Aguero and Edin Dzeko are the sole remaining forwards.
Sevilla's Alvaro Negredo is Pellegrini's main target and Fiorentina's Stevan Jovetic is also of interest but Pellegrini, unlike the loquacious Mancini, has vowed not to discuss other clubs' players.
It is not the only difference with his confrontational predecessor. Pellegrini has been appointed in part because of his man-management skills and brings a promise of the quieter life.
"You always have problems sometimes with some players, I also have it in the past but I think we will have very good relations in the future," he said.
One of his new charges concurred. "I spent eight years with the same manager," said Fernandinho, who played for Mircea Lucescu at Shakhtar Donetsk. "Our relationship was fantastic and I hope I will build the same relationship with Mr Pellegrini."
The midfielder has joined a club he believes have global respect. "In Ukraine as well as in Brazil Manchester City is now considered one of the best teams in the world and after I signed people back home in Brazil congratulated me for signing for one of the top teams," he explained.
While he hopes his move will propel him into Brazil's World Cup squad, Pellegrini is eager to win over the supporters who worshipped Mancini. "Manchester City fans are incredible," he said. "They always wish the manager, the players, the club [well]. I think I will not have any problem with their loyalty."
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