The manager is ready to select the 19-year-old after the striker's treble in their 4-0 FA Cup win at Aston Villa on Saturday.
City face Dynamo Kiev in the last 16 next month with Sergio Aguero their only fit striker as Wilfried Bony struggles with a calf problem.
Iheanacho was omitted from City's Champions League squad for the group stages but with Samir Nasri injured he is likely to replace the midfielder ahead of Tuesday's registration deadline.
Pellegrini said: "It's a decision we are going to take this week before the last date. Of course he pushes a lot. We need him because of Bony's injury.
"I see him working every day so I know what he can do
Maybe I received some criticism why we didn't replace (Stevan) Jovetic and (Edin) Dzeko and I answered we had Kelechi.
"We have a young player who is very important for our club. We have good players who are ready to play and you must keep the options. I know we have a player who deserves space in the squad."
Iheanacho added on City TV: "I'm so glad to score a hat-trick, it's a great day in my life but it's not the greatest day of my life because I need to keep working hard. This is the starting point of my career so I need to keep going."