A huge crowd at Old Trafford watched Ferguson and his players board an open-top bus which travelled along Chester Road to Manchester city centre.
Outgoing manager Ferguson spoke briefly at Old Trafford, before finally addressing supporters at Albert Square, to issue a challenge to the players he will leave behind after next week's game at West Brom.
"We have a young squad, with a lot of good young players, who are going to get better. The big test is to win it three times in a row. I hope the boys can do it."
Ferguson may be calling time on his 26-and-a-half-year reign, but he gave an indication of his enduring passion for United as he urged supporters to turn out on Tuesday for an U21 game against traditional rivals Liverpool.
He said: "We play that mob across the road. I hope some of you cheer the young lads on."
Ferguson signed off with a final goodbye at Albert Square, clearly stunned by the number of fans who had come out to show their support.
"I thought 1999 would never be beaten but you have beaten it," he said.
The only blot on the celebrations was a mixed reception for Wayne Rooney, who has handed in a transfer request.
Some supporters chanted 'Rooney' but there appeared to be a larger contingent booing the England striker, who did not take to the microphone on boarding the bus.
It was left to his team-mates to sum up the mood, Patrice Evra saying: "It was great to get over the line and a hugely proud moment.
"We bounced back straight away to win the trophy back, that's what we do at Manchester United."