City began the defence of their Premier League title with a 2-0 victory over Newcastle United on Sunday, with Dzeko leading the line and providing the assist for David Silva's opening goal.
The Bosnia-Herzegovina star bagged 26 goals in all competitions last season and after securing the futures of Vincent Kompany, Sergio Aguero and Silva last week, Pellegrini expects Dzeko to be next.
"I don't think it's 100 per cent finished – but yes, he will renew his contract," the Chilean said after the win at St James' Park. "He's a very important player for us.
"It's very important that we have four top strikers because we have so many games in four competitions.
"I think that Edin finished last season playing very well.
"Of course for me, he was one of the best players of the game (against Newcastle), not only because he participated in the first goal, [but] because he worked the whole game.
"He won a lot of aerial duels, he supported the ball, it was a very complete game, but I repeat, I think that Edin finished last season playing the same way as he's started now."
Dzeko had been expected to leave City last season following the arrival of Alvaro Negredo and Stevan Jovetic but has since flourished under Pellegrini's guidance.
