Argentina striker Aguero has been in prolific form so far this season, scoring 11 goals in 11 games in all competitions, including all four in City's 4-1 Premier League win over Tottenham Hotspur last weekend.
The 26-year-old will be out to add to his tally versus West Ham on Saturday, and Pellegrini feels the best is yet to come from the former Atletico Madrid man, who was plagued by muscle injuries last term.
"I don't think we have seen the best of Sergio," Pellegrini said.
"I've known him for many years, since when he was in Spain. He was an important player in 2011-12 and last year he was very important in the first part of the year.
"After that it was difficult for him, but I was always sure he would return to form.
"I think he can do better."
Midfielders Samir Nasri and Frank Lampard remain on the sidelines for City due to injury.
Lampard will miss the West Ham match due to the thigh problem he sustained against Tottenham, while the game will also come too soon for Nasri, who has returned to training following groin surgery and could make his comeback versus Newcastle United in the League Cup next Wednesday.
"Frank Lampard is not ready for this week, but maybe next week he will start working with the whole squad," Pellegrini added.
"Nasri was working with the whole squad after we got back from Russia [from the Champions League game with CSKA Moscow]. Maybe next week he will be ok. All the other players are fit."
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