Mills' last appearance for Man City was in August but he could now force his way back into the first team picture following Pearce's departure.
He told BBC Sport: "It's a chance to move on and a fresh start for everybody."
That could scupper Hull City's chances of bringing the defender back to the KC Stadium. But for the failure to fully recover from injury, Mills would have rejoined City for a second loan spell, following the 9 matches played earlier in the season. It was rumoured that if City retained their Championship status, Mills, who will be 30 on Friday, would join on a permanent basis. However, the chance of Premiership football under a new manager at Manchester City makes that look increasingly unlikely.
Meanwhile, Phil Brown says he will change the coaching staff at the club, while negotiations over his own future will take place next week between Adam Pearson and his agent.