Under Pellegrini, City have become one of the most exciting teams on the continent this season.
They have scored more than 100 goals in all competitions and are firmly in contention to win four trophies.
Their Champions League challenge, having reached the last 16 for the first time, will resume next month with a glamour tie against Barcelona.
Those encounters should provide a measure of ambitious City's progress and Pellegrini feels in time they will come to belong in such company.
He said: "We are working every day more.
"We have beaten Bayern Munich already in Germany but, I repeat, this team has a lot of things to improve.
"But I think we are not so far from the big teams.
"The only way to continue improving is to win titles. If you win titles it's because you do the right things.
"All the big teams have good players. The way we are working maybe, given time, we are going to be a very strong team in Europe.
"For the first time we have qualified for the round of 16.
"We have a tough game against Barcelona but I am sure it will be very difficult for the team that goes through because they will have played a good game."
City have also reached the Capital One Cup final and are just a point off the top of the Barclays Premier League. They host Sky Bet Championship Watford this weekend hoping to reach the FA Cup fifth round.
When asked if everything was in place for City to achieve those European ambitions, Pellegrini, speaking at a press conference, said: "Yes, I think so."