Rice is a regular in West Ham's lineup this season with 23 league starts.
"I think he is ready to play for England. We are just starting the development of him as a player," Pellegrini told reporters ahead of Friday's Premier League clash against Fulham.
When asked if he was one of the league's best holding midfielders, Pellegrini said: "In this moment, yes. At least, I am talking about the English players in the Premier League."
Pellegrini also compared Rice's maturity with that of combative Argentine midfielder Javier Mascherano, who spent four years in the Premier League with West Ham and Liverpool before his trophy-laden spell at La Liga side Barcelona.
"I started with Javier Mascherano (at River Plate) when he was 17 years old. He was similar to Declan Rice in his mentality," Pellegrini added.
"When they were 17 or 18 years old, it seemed that they had a mentality of a 35-year-old. He is 20 years old but has the mind of a mature player."
(Reporting by Rohith Nair in Bengaluru; editing by Sudipto Ganguly)
