The Ivorian's nosedive in form has coincided with City's stuttering results of late, adding to speculation he could link up with former manager Roberto Mancini at San Siro.
However, Pellegrini refused to criticise the midfielder and said Toure still had a key role to play at the club.
"Yaya is a very important player for our team," the Chilean said.
"Maybe all of you are waiting for me to criticise him or sacrifice him, but Yaya will continue playing here because he's a very important player for me and this squad, for the fans, for everyone."
Last weekend's 4-2 derby defeat to Manchester United was their fourth loss in six league games as City's title charge has tailed off dramatically.
The reigning champions have work to do to finish in the top four this term - amid pressure from Liverpool and Southampton - but Pellegrini maintains things are not as bad as they appear.
"We are always the team that has the most possession of the ball in every game, but maybe when you are not having the results you need all is negative," he added.
"But I think that the players are clear what we must do and after the two days [against Manchester United] we started thinking of West Ham with the whole week thinking of the next game.
"The mentality of any player winning or losing are the same thing, if you win you cannot say how good we are and you have to play another game and might lose.
"So it's very important to change your mind 48 hours after a defeat."
City host West Ham on Sunday, having lost 2-1 at Upton Park in October.
