Barcelona took charge of the last 16 tie thanks to a second-half penalty from Lionel Messi and a late Dani Alves strike at the Etihad Stadium in Tuesday's first leg, and Pellegrini blamed match official Jonas Eriksson for his side's defeat.
In a wide-ranging attack, Pellegrini accused Eriksson of making two mistakes over the penalty decision and even questioned why a Swedish official had been given control of the game.
He also said that Eriksson should not have been in charge because he had been criticised by Barcelona following his performance in their 0-0 draw at AC Milan in the quarter-finals of the 2011-12 competition.
Eriksson sent off City defender Martin Demichelis for bringing down Messi in the incident that yielded the 54th-minute penalty and Pellegrini said: "I think that the referee decided the game.
"Before the penalty there was the foul on (Jesus) Navas, when he (Eriksson) was three metres from the player, so he saw it without any problem.
"From the beginning I felt that the referee was not impartial to both teams. The penalty on Martin Demichelis was not a penalty - it was outside the box."
Asked why he had spoken to Eriksson at the final whistle, Pellegrini replied: "Just to tell him that he had decided the game. He must be very happy, because he decided the game."
The Chilean added: "He didn't have any control of the game. He decided for Barcelona from the beginning until the end.
"I think it was not a good idea to put a referee from Sweden in such an important match and a referee that made such important mistakes against Barcelona (in an earlier match)."
When he was asked to explain his reservations about Eriksson's nationality, Pellegrini said: "I think there are more important football (nations) than Sweden in Europe.
"It was a big game with two important teams. I think maybe in that kind of game, you need a referee with more experience.
"I think the best (biggest) mistake was to put a referee that damaged Barcelona in the stage of group (sic).
"This referee whistled the Barcelona-Milan game and he made an important error against Barcelona. Today he arranged (atoned for it)."
With Pellegrini preoccupied by his gripes about Eriksson's performance, it was left to captain Vincent Kompany to vow that City had not given up on the tie.
"If the tempo was in this game, it would have been to our advantage," he told ITV.
"If the game is the same as today, and we manage to stay away from some fouls, we have got a chance."
Barcelona manager Gerardo Martino felt that the outcome of the game was "fair", but he warned against complacency ahead of the second leg at Camp Nou on March 12.
"I'm not necessarily confident (about going through), but it's true that we've done a good game in the away leg," he said.
"We just have to repeat the same performance."
Media focus prior to the game had centred on the extent to which Barcelona have lost their mantle in the light of their 7-0 demolition by eventual champions Bayern Munich in last season's semi-finals.
Chelsea manager Jose Mourinho described Martino's side "as the worst Barcelona of many, many years" and Barca midfielder Cesc Fabregas said that he and his team-mates were pleased to have silenced their critics.
"We had a point to prove, and we did it very well," he told ITV.
"Some people were talking a bit too much before the game and now they have to shut up for a few days."
Barcelona took control of their Champions League round of 16 tie against 10-man Manchester City on Tuesday when they won 2-0 at the Etihad Stadium thanks to a Lionel Messi penalty and a late strike from Dani Alves.
Messi, tripped by Martin Demichelis on the edge of the box, which earned the defender a red card, scored after 54 minutes to give the four-time European champions the lead over City, who were playing in the knockout rounds for the first time.
Alves scored in stoppage time when he shot through the legs of City goalkeeper Joe Hart after a marauding run down the right.
The visitors dominated the opening 20 minutes and finished far stronger against City, who seemed overawed by the occasion.
The two sides, who had scored 228 goals between them this season, failed to produce the goalfest that many expected.
The two away goals Barcelona did score have given them a huge advantage going into the second leg on March 12.
After a drab and lacklustre goalless first half the match came to life immediately in the second session with Messi putting the Catalan side in front in the 54th minute from a penalty after he was tripped in the City box when in a position to score.
Alves almost sealed their berth in the quarters in the 90th minute for Gerardo Martino's side who will play the second leg match at the Nou Camp on March 12.
The defeat will leave Manuel Pellegrini a lot of thinking to do as his side failed to impress in front of a packed crowd.
Except for a few close calls they hardly gave Valdes under the Barcelona goal much cause for concern.
The best chance they had was when David Silva sent his crashing right footer to the right of Valdes but the goalkeeper was equal to the task bringing off a brilliant save.
90" GOAL! Alves scores after a defensive lapse from City.
Man City 0 Barcelona 0
43" Negredo once again fails to make good a cross as he heads wide.
42" Iniesta to Messi, makes one of his darting runs through the middle and relays for Fabregas but his cross is cleared to safety.
40" With five minutes to go for the half time whistle, the crowd is getting impatient.
38" Sanchez makes a solo run but is nicely challenged by Demichelis.
36" YELLOW! for Kolarov for a foul on Alves.
35" Mascherano sends a long diagonal ball but Negredo's half-hearted effort is futile.
33" Free-kick for Barca after Messi is tackled wrongly by Kompany but the Barca talisman can only thump the resulting freekick into the City wall.
32" Xavi's long range shot tests Hart who collects it on the second attempt.
30" Messi tries a top-of-the-box shot with his weaker foot, his right, and the ball soars high over the bar.
29" Iniesta cuts through the City defence like knife through butter but lack finish and ideas in front of goal.
27" YELLOW! for Negredo for a tackle on Pique.
26" Negredo has a feeble attempt at the Barca goal but Valdes makes a regulation collection.
25" Both teams having an equal share of the exchanges now.
24" City earn another free-kick and from a goalmouth melee Valdes fumbles in his first attempt to collect but does so in his second before Toure can get to it.
YELLOW! Dani Alves is booked for a second rough tackle.
23" City come into their own slowly as they get more of the ball possession.
19" Silva plays in Negredo who makes a wonderful attempt from a tight angle.
18" Kolarov made a dangerous run beating a defender but his angle is narrowed by Valdes. he manages to chip across but there are no takers.
16" City get into the Barca box but Valdes is felled by Kolarov while going for a header.
12" Barca get another corner but Hart is quick to charge out and punch it away.
10" Barca dominate early play but are yet to make any headway.
9" Messi, Iniesta and Sanchez try to break through but the City defence looks solid.
7" Messi to Busquest good one-two but Toure stands firm.
5" Barca take early control amid a lot of cheer for City
1" Play gets under way with City kicking off.
Neymar is on the Barcelona bench tonight, and the Brazilian superstar has admitted he is surprised just how good Lionel Messi is since joining the club in the summer.
"He surprised me a lot!" said Neymar. "Even as a player. Watching him on TV back home, I hadn't realised just how good he was."
In five minutes' time, we'll get to see for ourselves. Excited?
Time to get charged up for the most anticipated match of the Champions League as the players start trooping in. All eyes are on Messi.
Messi gives a thumbs up as he is applauded by City fans either side of the tunnel as he walks after warming up.
Pellegrini's record in Champions League as coach reads like this: 50 matches, 22 wins, 9 lost and 19 draws.
Tension is palpable at the Etihad Stadium as just 15 minutes to go for the kick-off between two teams meeting in the Champions League for the first time.
Deafening cries of 'Barca, Barca, Barca' greet the Barcelona players as they emerge for their warm-up.
Plenty of travelling fans still outside Etihad Stadium but the ones inside are making a right racket.
There is a cracking atmosphere at the Etihad ahead of the round of 16 first leg tie between Manchester city and Barcelona.
Manuel Pellegrini makes six changes to the City starting XI from the one that kicked off the win over Chelsea, with Aleksandar Kolarov set to start on the left side of midfield ahead of Gael Clichy at left-back.
Fernandinho returns from injury but along with Pablo Zabaleta is a booking away from a one-game ban, while James Milner is suspended.
There are three changes for Barcelona from the side that thrashed Rayo Vallecano 6-0 on Saturday, but Neymar only makes the bench.
Fabregas gets look-in as Neymar is benched.
Man City: Hart; Zabaleta, Kompany, Demichelis, Clichy; Navas, Toure, Fernandinho, Kolarov; Silva; Negredo.
Subs: Pantilimon, Lescott, Richards, Garcia, Nasri, Jovetic, Dzeko
Barcelona: Valdes, Alba, Pique, Mascherano, Alves, Xavi, Busquets, Iniesta, Fabregas, Messi, Sanchez.
Subs: Pinto, Bartra, Adriano, Song, Sergi Roberto, Pedro and Neymar Jr.
Neymar is unlikely to start despite a good comeback from injury in the match against Rayo.
Barcelona are winless in five straight games in England.
Man City are undefeated at home against Spanish clubs.
Barcelona have attempted (4,812) and completed more passes (4,125) than any side in this season's competition.
Lionel Messi (65 goals) is only six goals away from equalling Raul's Champions League goalscoring record (71 goals). He's netted six goals in only three games this season.
Manchester City have never failed to score at home in the Champions League.
In the group stages, Barcelona topped Group H with 13 points, while City finished on 15 points along with Bayern Munich but had to settle for second place behind the German side on goal difference.
Manuel Pelledrini's side partake in their first last-16 Champions League tie.
It can be billed as the 'clash of the titans' when Manchester City take on four-times European champions Barcerlona in the first leg of the Champions League round of 16 fixture at the Etihad Stadium in a few hours from now.
Going by performances in their respective leagues - City are third in the Premier League with 54 points, while Barca are on top of La Liga with 60 points - there is no doubt that these two teams should have met in the final of Europe's premier tournament.
But such is the nature of the draw that one team will have to bow out before even making the last eight stage thus depriving their myriad fans a chance to back them all the way to the pinnacle of European success.
Barca coach Gerardo Martino was right when he said: "City are one of the best teams in the world and it is difficult for us to be playing them now when they are in such a good level. This could easily have been the final, and if we had to play them I would have preferred to play them later."
However, Lionel Messi's return to the side should give Martino and his boys the confidence to take on Manuel Pellegrini's side in their own den.
The maverick Argentinian scored twice against Rayo Vallecano on Saturday to overtake Alfredo di Stefano in La Liga scoring history.
The star striker has now scored 337 goals for Barcelona, a record for one club, but his record in England is in stark contrast having only ever managed one goal in the 2011 Champions League final against Manchester United at Wembley.
Barcelona can however fall back on Neymar who too was out of action for a couple of weeks and the coach said he was delighted Neymar was 'healthy again'.
For City, the return of Samir Nasri after he missed seven games due to injury, will come as a boost. Nasri came on as substitute and scored the second goal against Chelsea in the FA Cup over the weekend.
But the men in blue have cause for worry with Sergio Aguero being ruled out of the first leg through injury, while James Milner misses the tie due to suspension.
Pablo Zabaleta and Fernandinho too need to avoid rough tackles as they could miss the second leg if booked here.
Coach Pellegrini is unperturbed though with a side that has scored 117 goals in all competitions this season.
His only aim is to get a good result against a good side. "Our fans deserve a victory against a big club to show how the club is progressing," said the former Villareal, Malaga and Real Madrid coach.
City gave a hint of their growing strength with a 3-2 win away to champions Bayern Munich to bring about a transformation from domestic also-rans to European champions.
If they can come out on top in the two-leg clash against a great side like Barcelona it would mean as good as winning the title.