The Magpies sanctioned the sale of Forster to Celtic in 2012 after seeing him take in two productive loan spells at Parkhead.
Having got the taste for regular first-team football in Scotland, Forster was reluctant to return to St James' Park and fill back-up duties to Tim Krul.
Pardew admits he had been hoping to talk the towering shot-stopper around, but now concedes that a man who stands on the brink of a first senior cap for England probably made the best call for his career.
He said: "Let's get one thing straight about Fraser, we didn't want to lose him. But he was absolutely adamant that he wanted first-team football and we couldn't provide him with that.
"At the time, we just felt that Tim had the edge. Since then, there's no doubt Fraser has progressed at Celtic.
"It was a great move for him because it's opened the door to a lot of European football. He's done terrific in a lot of those games."
On the qualities which have brought Forster to the attention of England coach Roy Hodgson and could see him make his Three Lions bow against either Chile or Germany, Pardew added: "Fraser is such a big frame in the goal, and that's probably his biggest asset.
"He can reach right into the corners of the goal to make fabulous saves when others might struggle to get up there.
"We're all chuffed for him because we really liked him as a guy. Unfortunately, it was just a case of the timing not really working out.
"I only had him for a short period, but he was always a confident guy, very assured about his ability.
"I think he's a very intelligent boy and that will stand him in good stead if he is selected to play for England at some stage."