"At the age of 26, you always have to think that there's more to come," Neville told BBC Radio 5 live.
"We need to see Wayne Rooney improve and he needs to see himself improve."
Neville, now an England coach, added: "He's a wonderful player, one that is at his best when he's like the street kid; fighting for every ball, taking every free kick, every throw-in, tackling and heading, fighting to win."
Neville pointed to the examples Rooney can learn from in the Old Trafford dressing room if the 26-year-old is to further his game.
"Paul Scholes and Ryan Giggs have adapted their games," said Neville, who won eight Premier League titles, three FA Cups and the Champions League with United.
"Ryan Giggs has gone from a flying left winger to someone who now plays off the front at inside left as well as central midfield.
"Paul Scholes was a goalscoring number 10 player when he first started as a 16-year-old, now he's a holding midfield player who controls the game.
"You have to adapt. Rooney is still a centre forward, but he'll adapt over the next 10 years to become someone who's thought of in that same way as those two players."