City face an early test as they host last season's runners-up, Liverpool, at the Etihad Stadium on Monday.
Pellegrini's summer recruitment has been modest in comparison to that of Chelsea - who have assumed the mantle of favourites - while Liverpool have been highly active in transfer market.
But City were already in a position of strength and while Pellegrini expects improvement from all the title rivals, he has complete faith in his men to deliver again.
The Chilean said: "I think we always have to be better, we have to improve every season
It doesn't matter what happens with the other squads.
"Here in the Premier League you always have four or five strong teams that can win the title and if we want to continue winning titles, of course, we must improve.
"But I always say my players are the best players in the Premier League and we have the strongest squad, not only attackers but also defending, and in the whole squad.
"Other teams also have strong squads but if you are analysing the players I prefer mine."
City have bolstered their squad with the additions of defenders Eliaquim Mangala and Bacary Sagna, midfielder Fernando and goalkeeper Willy Caballero.
England midfielder Frank Lampard, on loan from sister club New York City, can temporarily provide an extra option.
Pellegrini hopes that competition for places has also intensified up front with Stevan Jovetic, a £22million signing last summer, looking sharp after an injury-marred first season at the club.
The selection headaches that could result are something that Pellegrini is looking forward to.
He said: "As a manager, the most difficult decisions are when you don't have players.
"When you have good players it's easy because when you have so many games in the season you need to change them.
"Normally we will play around eight matches a month so it doesn't matter
It's important to win titles."
City opened their title defence with a 2-0 win at Newcastle last week but are still to get up to full speed.
Sergio Aguero, who came off the bench to score at St James' Park, is one of a number of players still not rated as match-fit after delayed summer breaks due to the World Cup.
Mangala, who is still to make his debut after his £32million signing from Porto, has again been ruled out
The game may also come too soon for Lampard.
Right-backs Sagna and Pablo Zabaleta are also still to feature but are in contention.
Meanwhile, former Liverpool boss Graeme Souness has stressed he would not be making the "high-risk" signing of Mario Balotelli if he was still in charge at Anfield.
Balotelli's proposed transfer from AC Milan appears to be imminent, with a £16million fee reportedly agreed and the maverick Italy striker having been pictured at the Reds' Melwood training ground on Friday.
But Souness is not convinced it is a good move for Liverpool.
The Scot, writing in the Sunday Times, said: "At times Balotelli doesn't seem to enjoy football.
"Big teams can do without people who pick and choose when they will have a go
It's a high-risk signing
I wouldn't want him.''
Liverpool manager Brendan Rodgers refused to speak about Balotelli specifically on Friday at his pre-match press conference to preview Monday's clash at the Etihad Stadium.
But he did talk about the Merseyside club's ''extensive code of conduct'' and his ''complete confidence'' any incoming player will not be a disruptive influence, before adding: ''We understand that sometimes you have to take a risk with people and, a lot of the time, if you take that risk you can get a reward for it.''
Balotelli will not be able to feature against City even if a deal goes through before the game as it needed to have been completed by midday on Friday for him to be eligible, but there could be debuts for summer signings Lazar Markovic and Alberto Moreno.
"Whatever time (in the season) this game comes, it's always very important - and for us, so early on, it's even more significant," Rodgers said
"But I don't think it will define everything
It's over the course of the 38 games.
"We did reasonably well in the big games last season, but it's over the course of the 38 and that's something I'll always look at.
"We've gone there in the last two seasons and performed very well.
"That will be the same idea going into this game - to perform
It's early in the season and we started with a great win, and now to go and perform and hopefully get the result is what the aim will be."
Source : PA
Source: PA