Ferguson told the club's official website that Kagawa had the ability to shine after signing the 23-year-old from Germany's Borussia Dortmund.
"There was a lot of interest in him... because he started so well at Dortmund," the United manager said after the Japanese player's goal sank China's Shanghai Shenhua in midweek.
Shanghai lined up without former Chelsea strikers Nicolas Anelka and Didier Drogba and Kagawa stole the show, scoring the game's only goal in the 68th minute.
"But I never think you can tell after one season," added Ferguson. "I wanted to see how he'd do in his second campaign - it's more of a test because your opponents know more about you.
"He passed with flying colours. He was even better, in fact. So that was a straightforward decision for us."
Kagawa told Japanese media: "Technically I have the confidence to fit in. I have to stay confidence and keeping on working hard. From here on is when it counts."
Ferguson is hoping Kagawa's speed and industry will add an extra dimension to his side after they were pipped to the title by crosstown rivals Manchester City last season.
"Shinji's intelligent, fast, has quick feet and works very hard," said the 70-year-old Scot, not one to heap lavish praise on his players.
"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."
