The pair share a close relationship after Magath brought the forward to Germany in 2007.
Dzeko went on to score 85 times for Wolfsburg before Manchester City paid £27million to sign him in January 2011.
Dzeko has failed to hold down a regular first team place at the Etihad since signing though, and has often been linked with a move that would offer him a chance to start week in week out.
Magath will be reunited with Dzeko this weekend, when his struggling Fulham side travel to the Etihad.
“Edin has a different situation here (than in Germany).” Magath said.
“He is not the only striker at Manchester City and there are a lot of very good players.
“Perhaps he should come to Fulham and he could score a lot more goals than he does at City.”
Magath also confirmed that £12million January signing Kostas Mitroglou will miss Saturday’s game with a knee injury.
The Greek striker has managed only two Premier League appearances for the Cottagers so far.