It was his second season, Sir Alex told ManUtd.com, that cemented the United manager's belief that Kagawa had the necessary attributes to succeed at Old Trafford.
"There was a lot of interest in him after his first season because he started so well at Dortmund," the United boss said.
"But I never think you can tell after one season. I wanted to see how he'd do in his second campaign - it's more of a test because your opponents tend to know more about you.
"He passed with flying colours. He was even better, in fact. So that was a straightforward decision for us."
Ferguson added: "Shinji's intelligent, fast, has quick feet and works very hard.
"At 23 he's a good age and already has a couple of years' experience at a big club in Borussia Dortmund.
"It's obvious he's a very good player. We have high hopes for him."