Sancho, who is regarded as one of the brightest young talents in European football, has been linked with a return to his homeland of England this summer.
"He decided to leave, why should he come back?" the City boss said ahead of Thursday's clash with new champions Liverpool.
"When he decided to move to Dortmund it's not that he's going to come back. It would make no sense. If he wanted to leave, I'd say he doesn't want to come back.
"It's part of the process, we'd like to stay with the players of the last 10 years to be eternal but we grow in years and we have to replace them with new players."
The news will be welcomed by Manchester United, who are heavily interested in signing the England international.