The 24-year-old is running down the final months of his contract with the Ligue 1 champions, who were informed in the summer that he would not be activating his 12-month extension option.
Desperate to avoid losing Mbappe for nothing in 2024, PSG banished him from the main group of first-team players and accepted a world-record bid from Al-Hilal, only for the striker to turn his nose up at a move to Saudi Arabia.
Mbappe has since been re-integrated into the first-team squad at the Parc des Princes, but PSG remain in the same place with his contract situation and are at risk of seeing him walk out of the door as a free agent at the end of the campaign.
Real Madrid have tried and failed for the past couple of years to bring Mbappe to the Bernabeu, but Los Blancos - who saw Karim Benzema join Al-Ittihad in the summer - have been widely expected to secure his signature next year.
However, the Spanish giants have firmly denied claims that they have already begun negotiations over a deal, and Nasri believes that it would be better for Mbappe to be the "king" in the French capital.
Nasri was on the books at Marseille for 13 years between 1995 and 2008 before joining Arsenal, and the 37-year-old does not believe that he would have joined the Gunners if Les Olympiens were owned by Qatari chiefs.
"Already two years ago, I said he was the best player in the world. I still think so. He is from the Paris region: I, in his place, I would stay at PSG, instead of going to Madrid," Le 10 Sport quotes Nasri as saying.
"If OM had been owned by Qatar when I was at the club, I would never have left. I think it is better to be the king in your village.
"If he leaves, it will leave a hole, but with the budget, they will be able to recruit other players - who will not be Mbappe, that is clear. But today, he has such importance, whether in the French team or with his club."
While the option to extend Mbappe's contract is still on the table, a renewal at PSG has supposedly not been ruled out, and the Frenchman affirmed numerous times in the most recent window that he planned to see out the season with Les Parisiens.
The former Monaco man has also outlined his desire to win the Champions League with Luis Enrique's side, offering hope of a new deal if PSG suffer more European heartache this season.
Mbappe overtook Edinson Cavani as PSG's all-time leading goalscorer in the 2022-23 season and now sits on 224 goals from 273 matches across all competitions, in addition to setting up 99 more.
The World Cup winner has started the 2023-24 campaign with 12 goals and one assist in 13 games for PSG, who return to Champions League Group F action away to AC Milan on Tuesday night.