Italy boss Mancini gave Balotelli his Serie A debut for Inter when the striker was just 17 years old, in December 2007, and a first Azzurri cap came before his 20th birthday.
Balotelli followed Mancini to Manchester City, where he showed flashes of brilliance but his stay was tainted by off-field controversies and claims about his conduct.
After a string of subsequent moves, which has seen Balotelli also play for Milan, Liverpool, Nice, Marseille and Brescia, he is without a club at the age of 30.
Speaking at a sports industry event on Thursday, Mancini said of Balotelli: "I am very sorry to see him in this condition. At the age of 30 he should be in full technical football maturity and would have been very useful to the national team.
"I love him and I hope something good always happens to him."
Mancini, appointed to the Italy post in 2018, immediately recalled Balotelli to the national team after several years without a cap, but the striker could not keep his place.
Balotelli has been linked with several clubs since leaving Brescia at the end of last season and said earlier in October that he would join a new team "in a few weeks".
Mancini said France and Spain would be the teams to beat when the delayed Euro 2020 takes place next year.
He may already be looking to life beyond his Italy role, saying of the experience of an international boss: "I find it hard to feel like a coach, I don't like this life very much. My favourite thing is to coach every day."
Mancini, 55, also expressed concern about the state of football during the COVID-19 pandemic.
"COVID is destroying us," he said. "If it were up to me, I would already send more crowds to the stadiums, perhaps well distributed among the various sections."