The striker was substituted in the early stages of the second half in City's 3-2 derby defeat to Manchester United on Sunday, sparking criticism from his manager.
Mancini accused Balotelli of wasting his talent and stressed that these performances could not continue, leading to reports that the former Inter Milan man's time in Manchester was up.
But the Etihad boss has moved to calm speculation by highlighting the player's quality and confirming the Italy international will not be transferred.
"Balotelli is not for sale," Mancini told Sky Sport Italia.
"Mario is a City player, he is loved by the fans and the management. He has been an important player for us.
"A player of his quality should think exclusively to his work and his family, he has talent and he cannot blow it as he is doing.
"Our paths may separate if I change team, but he will remain at City."