Pellegrini has warned his players they must approach Tuesday's trip to the King Power Stadium as they would any other top-of-the-table showdown.
The Foxes were the Barclays Premier League's surprise leaders at Christmas and they held onto that spot on Boxing Day despite slipping up at Liverpool.
That was only their second defeat of a campaign in which City - many people's favourites for the crown - have already lost five times and Pellegrini does not believe one bad result will prompt the slump some predict.
Pellegrini, whose side moved within three points of Leicester by thrashing Sunderland 4-1 on Saturday, said: "Before that they beat Chelsea and drew against (Manchester) United.
"We must consider Leicester not thinking that they lost on Saturday and could collapse, but as a team that will have options to be fighting for the title until the end
With that mentality we must try to play the game.
"They are top of the table because they deserve to be
They have important players in a very good moment with high performance."
Leicester's remarkable rise has been fuelled by the form of attack duo Jamie Vardy and Riyad Mahrez
Vardy was the competition's leading scorer with 15 goals after 18 games with Mahrez just two behind
In addition Mahrez had weighed in with seven assists and Vardy three.
Yet while they may provide a lot of the spark for Claudio Ranieri's side, Pellegrini is aware there is much more to the team.
The Chilean said: "Maybe both of them are in a very good performance but I don't think they could do it if the complete team was not performing well
They are important players but we must think a lot of different things and not just two players.
"We must think about Leicester as a team and hope if we repeat the performance we did on Saturday we can beat them - but it will be a very tough game."
City got back on track against Sunderland after a disappointing loss to Arsenal last Monday.
The gloss was taken off that victory, however, by the loss of captain Vincent Kompany with a recurrence of a calf injury just nine minutes after coming on for his first appearance in nine games.
City are again likely to be without the key defender although the full extent of the problem is not yet clear.
The other main concern is striker Sergio Aguero, who looked ineffectual on his return from a heel injury against Arsenal and did not get off the bench in the Sunderland game.
But Pellegrini said: "Kun was on the bench because if we needed him he could have played in the second half, but we have to play Leicester three days later - a difficult game - and 10 games during January.
"He had a small problem so I think it was better not to take any risk and we were winning 3-0 at half-time, so I think it was better for him to rest
He will be 100 per cent on Tuesday."
Source : PA
Source: PA