PSG boss Carlo Ancelotti had made Balotelli one of his top targets and was confident of luring the Italian striker to France.
But his huge offer was snubbed when Mancini told his bosses he would walk out on the Premier League champions if his fellow Italian was allowed to leave, the Daily Star reports.
Mancini was determined to keep Balotelli, despite the star being one of the most controversial players in Europe.
Mancini admitted there has been strong interest in Balotelli this summer following his Euro 2012 displays.
He said: "Mario did a fantastic European Championship. He's 21, it is clear that he can improve. This summer we had a lot of requests for him." (ANI )