The Liverpool man says Sterling will be quietly happy this weekend's game is at the Etihad and not Anfield.
The young forward made an acrimonious move from Anfield in the summer, opting to join Manchester City in a big money deal.
That move to the Etihad came after months of speculation about his future, as well as some ill-advised comments from both him and his agent.
Sterling very much played the villain in the whole affair, with Liverpool fans quickly turning against him as it played out, but Lallana says he does have sympathy for his England teammate.
“I do have some sympathy for Raheem. It’s no secret that it could have all been dealt with a little bit better,” he told the Liverpool Echo.
“A lot of it was in the public domain which wasn’t nice and wasn’t right for Raheem. He wanted to concentrate on his football last year but so much was made public and so many people were talking about it.”
Sterling has made a strong start to life with Manuel Pellegrini’s side, with the Blues currently sitting joint top of the Premier League table.
This weekend sees him take on Liverpool for the first time since his move to the Etihad, as the Reds make the short trip to Manchester.
He is sure to get a frosty reception from the travelling faithful, who still bear a grudge against him for the manner in which he left Anfield.
And Lallana says his England teammate will be quietly happy that his first encounter with his old side is coming at the Etihad.
“I think he will be quietly happy that it’s at City’s ground,” he added.
“Going up against Raheem, there’s possibly an extra edge to the game but I think it would be more so if the game was at Anfield.”