Professor Paul Bartholomew told councillors this was because of the current funding model for higher education.
His comments cast doubt on whether the commitment in the New Decade, New Approach Deal is currently achievable.
Prof Bartholomew believes any more than 6,000 students could prove problematic.
Ulster University (UU) announced on Tuesday it will relocate undergraduate healthcare degrees to the Magee campus.
This will bring student numbers to about 5,000 by 2022.
“I think 6,000 students is probably achievable, but going beyond 6,000 requires a different operating environment and that has governmental and political parameters to it,” Prof Bartholomew said.
“It relates to the maximum student number cap.”
Students in the North of Ireland do not pay a full contribution to university fees, which are supplemented by the Department of Economy with block-grant funding to universities.
That block-grant funding is largely fixed, but Prof Bartholomew warned this could be subject to “being diminished” due to pressures on public finances.
“The fact there is a block-grant limits the amount of NI students that can be accommodated in NI higher education.”
The New Decade, New Approach deal was signed in January 2020 and restored devolved government to Northern Ireland after almost three years .
The decision to move the School of Health Sciences to Magee will bring more than 800 more undergraduate students to study at the campus from 2022.
UU’s School of Health Sciences courses include diagnostic radiography, occupational therapy, radiotherapy and oncology, physiotherapy, podiatry and speech and language therapy.
It means the School of Medicine, Paramedic Practice and School of Nursing will all be based in Derry.
On Tuesday, Economy Minister Dianne Dodds said the relocation of undergraduate healthcare degrees was a “step forward” for the north west campus said there were concerns about the impact on UU’s Coleraine campus.
Mrs Dodds said she would meet Prof Bartholomew and press him “on his plans for balance across all of the university’s campuses”.
In response, the mayor of Derry and Strabane District Council questioned whether Mrs Dodds is committed to the expansion of Magee.
Speaking to BBC Radio Foyle, Cllr Brian Tierney said: “I was disappointed to read the statement from the minister.
“For me, there is a commitment to New Decade, New Approach to bring 10,000 students to Magee.
“I think, as a city, we should be questioning is the minister committed to New Decade, New Approach?
“Is she committed to the expansion of Magee and improving facilities across the city and district?”
Mrs Dodds’ party colleague Gregory Campbell rejected any suggestion she was not committed to New Decade, New Approach.
The East Derry MP said the mayor’s comment’s displays the “misunderstanding between the likes of people representing the north coast” and those representing Derry”.
“There is a feeling in Coleraine that when Magee benefits, Coleraine loses and there is in Londonderry a feeling that when Coleraine benefits, Magee loses.“This shouldn’t be a zero sum game – that is what the minister was drawing attention to,” Mr Campbell said.
A UU spokeswoman told the BBC it was committed to “achieving a better campus balance”.
She added: “Coleraine campus is a thriving and distinguished centre of academic excellence across both research and teaching in diverse disciplines including education, journalism, geography, biomedical science and pharmacy.
“Over recent years the university has invested £27m in facilities on Coleraine Campus, including a £5.1m sports complex for staff, students and the local community.”
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