The 24-year-old scored just four goals in 28 appearances for Liverpool last season after joining for £16m from AC Milan.
He is expected to leave Anfield this summer after being left out of the pre-season tour to Finland and attracting interest from Serie A.
However, Pirlo, who has played alongside Balotelli at international level for Italy, still thinks he has the potential to reach the top.
“He made mistakes when he was younger, he knows this,” Pirlo told shortlist.com. “But I hope next season goes well for him, because I still believe he has all the attributes to be one of the top forwards in Europe.
“I’ll tell you that Mario is one of the nicest guys you will meet. I used to walk into training in Italy and even before he said something I could just look at his face and I would start laughing. There are never boring moments when Mario is around.”
While Balotelli looks to be on the move this summer, Pirlo has already completed his transfer from Juventus to New York City.
It is the first time the 36-year-old has played for a club outside of Italy, although he did come close to moving to the Premier League in the past.
“Occasionally you meet somebody in life who is not your father, but you look at them as a father, and Carlo (Ancelotti) was that man for me,” he explained.
“When he was at Chelsea we had many calls about me joining him. I was interested, and there were discussions in the club. The fee was the ultimate issue, though – Milan wanted a Chelsea player in exchange and no agreement could be reached.”
The World Cup winner will now be playing alongside former Chelsea midfielder Frank Lampard in the Big Apple and against LA Galaxy’s Steven Gerrard, who he could have played with at Milan.
“Carlo tried to sign him for Milan so we could play together, but he had no interest in leaving Liverpool,” revealed Pirlo.
“That night in Istanbul, Liverpool’s fight back was centralised on Steven Gerrard. He was their leader, their star player, their man who made it happen.
“We could have played together, but now in MLS we will be playing against each other, and I will look forward to that.
“Throughout his career, Frank has positioned himself as one of the greatest goal-scoring midfield players of the generation. Often his tally for the season would be what you would expect from a forward. I am sure we can come to some agreement on set pieces.”
While Pirlo was full of praise for Gerrard and Lampard, he also singled out Paul Scholes for his technical ability.
“Paul Scholes was technically one of the best I have seen – not just one of the best Englishmen, but quite simply just one of the best,” he said.
“There was a point when England had Paul Scholes, Frank Lampard, and Steven Gerrard, and that was the stage when you looked at England and thought they could really win something.”