The boss was asked about the former Academy winger after City were paired with Borussia Dortmund in the Champions League quarter-finals on Friday morning.
Sancho spent two years with City before deciding to sign for Dortmund in 2017.
He has now played 127 times for the Bundesliga side, scoring 46 goals as well as winning 18 England caps.
Asked if he was disappointed the player had moved on, Pep said: “I said many times, he decided. He is doing really well. Congratulations to him. He is really good.
“We wanted him to stay, but he decided to leave. I wish him all the best except when he plays against us! If he is happy, I am happy.
“Nobody knows what might have happened. Maybe he would stay and we would not play well, or maybe better.
“The life of every person… they decide what life they wants to lead. We wanted him, he decided to go...all the best.
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“We know the quality he has. Dortmund are a strong team. In Champions League they always do well. We have to prepare well.
“Now we have five days, ten days to watch them, see the different systems they use, focus on what we have to do, maintain our level, and try to do a good game.
“I am not thinking about the semi-finals or finals.”
Moving on to matters more immediate, the boss says he tailors his teams to suit the opposition.
He also added that a recipe for success is not about competing for a spot in the side – without a good team spirit and everyone pulling together, pushing for that starting berth is not enough.
“Everywhere, all the teams, the players play a lot of minutes,” said Pep.
“But I choose the team that suits the opponents. The ones that trust. Not just the qualities they have. A lot of players played a lot of minutes this season and we will continue like this until the end.
“It’s important that all of them are fit. They are ready. Competition is good, but the collaboration between them is even better.
“Sometimes competition is the best, but collaboration with your mates is much, much better.
“That means we have a common objective. When you do this, you will do well. That’s the only secret for success.
“The ones not on international duty will have a few days off after Everton and then we will train with the five, six players we have plus some from the Academy.
“The ones in the bubble. Before we gave one week off, this time we will train a little bit in between. We start to prepare Leicester, Leeds and Dortmund.”
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