The 19-year-old Nigerian striker got on the scorers sheet and set up two other goals as City cruised through to the quarterfinals with a 5-1 win at the Etihad Stadium Wednesday night.
It was an impressive way for the youngster to mark his first start for the club and it offered City some encouragement at a time of limited attacking options with leading scorer Sergio Aguero still out injured.
Pellegrini said after the game: "It was very important for Kelechi to demonstrate once again that he's a very good player.
"He's not just a striker -- he provided two assists. I'm very happy for him. He has things to improve but he's working in the correct way."
Iheanacho played up front with Wilfried Bony, who also scored. Iheanacho teed up goals for Kevin De Bruyne and fellow teenager Manu Garcia while Yaya Toure also struck from the penalty spot.
Pellegrini said: I think this moment it's important for the team to have Kelechi and Bony as options without Kun [Aguero].
"They can play both together as they did tonight. Bony played well. Of course Kelechi was very impressive but Wilfried also knows he has all my trust and his teammates' trust.
Picture credit Eurosports
