The £24million summer signing from Inter Milan eventually came off in the 57th minute on Thursday night after being over a minute late coming out for the second half with City losing 2-0 in this last-16 first leg game. He appeared in some distress and was constantly rubbing his face before being replaced by Carlos Tevez.
Mancini said: "Mario had an allergy, I don't know what, his face was swollen, I don't know why. He wanted to play in the second half but he had this problem 10 seconds before coming out. I came out a minute before the players and I didn't see Mario. He then said he could play but his face was swollen."
It is understood 20-year-old Balotelli is allergic to certain types of grass.
City's only shot of note came from Yaya Toure in the second half with the score at 1-0 but goalkeeper Olexandr Shovkovskiy got down quickly to turn his effort around the post.
Mancini is convinced they can keep their European campaign going and make the quarter-finals of the competition.
He said: "I think we had some problems and I hope that it can improve with the strikers for the return match.
"If the strikers improve and the defenders pay attention maybe we have a chance to go through.
"Dynamo Kiev were fresher than us. A few of us in the championship we have played (recently) every three days."
Goals from former Chelsea striker Andriy Shevchenko and Oleh Gusev either side of half-time handed Dynamo victory in Ukraine.
Source: PA
Source: PA