Ferguson initially dismissed City as "noisy neighbours" following a 2008 takeover by Abu Dhabi investors but now says that the rivalry is becoming as important as that with its traditional enemy Liverpool.
"If we're going to be contesting with them for the league titles regularly — and I think we will be — it will become almost as important as the Liverpool derbies," Ferguson said. "Maybe not in terms of the emotions; the Liverpool-United games are emotional. But certainly in terms of importance this supersedes Liverpool at the moment because City are our direct opponents.
"Manchester City are up against us to win titles. We have to focus on the team who can affect our progress in terms of winning the league."
United overtook Liverpool as England's most successful club with last year's record 19th league title.
City would have to win the Premier League every season until 2029 to relieve its local rival of that status but it can take a huge step forward with the victory that would draw it level on points with United at the top of the Premier League.
But City manager Roberto Mancini has remained calm, pointing out that he is used to these types of situations, even if City isn't. While Mancini won three league titles as manager of Inter Milan and another two as a player, City has not been English champion since 1968.
"I've experienced other crucial matches, like the last match of the Serie A season in 2007-08 when I was Inter coach," Mancini told France Football magazine. "At halftime, Roma was champion, but in the end we won the Scudetto by scoring twice in the second half away to Parma, which was fighting to stay up.
"But yes, this match is very important. City has been waiting for a match like this since 1968."
If it wins, City's superior goal difference would make it a firm favourite for the title.
That is an entirely plausible outcome given that City has already won 6-1 at Old Trafford this season, handing Ferguson his worst defeat in 26 years at United. City also knocked United out of the FA Cup semifinals last season on its way to ending a 35-year streak without a trophy.
"We have to get used to playing City in important games," Ferguson said. "They're not going away. The financial support they have means we'll meet them in a lot of big games. Cup finals, semifinals: we've already done that. They're there."
United beat City 3-2 in the season-opening Community Shield at Wembley and won at the Etihad Stadium by the same score in January's FA Cup third round.
"Playing often against United has helped us to improve. It has helped us to learn," Mancini said. "We've got closer to them but they are still better than us. They have more experience and this team spirit that we are in the process of building."
Both teams have thrown away the chance to take a decisive grip on the title race, most recently when United lost 1-0 to Wigan and then drew 4-4 with Everton after leading 4-2.
City midfielder Gareth Barry said United's spell as leader and favourite had lifted the pressure from his team.
"There's probably been less pressure on us in the last few games," Barry said. "When the game is that big the pressure is on both sets of players and it's probably going to be down to who handles that best.
"People are speaking of this as maybe being the biggest game in Premier League history and on a personal level, it's a massive game for me to be playing in."
Ferguson must decide whether to change the side that dropped points against Everton, with Phil Jones and Chris Smalling both available to replace fullback Rafael da Silva. Ryan Giggs, Tom Cleverley and Park Ji-sung could also come in to strengthen midfield.
Arsenal could strengthen its hold on third place when it plays Stoke in one of Saturday's seven games. Fourth-place Newcastle is at Wigan, while Everton hosts Fulham, Liverpool is at Norwich, Sunderland hosts Bolton, Wolverhampton Wanderers is at Swansea and West Bromwich Albion hosts Aston Villa.
On Sunday, it's Tottenham vs. Blackburn and Chelsea vs. Queens Park Rangers.
The Premier League has scrapped team handshakes before Chelsea's match because of John Terry's pending racism trial.
The Chelsea captain is accused of racially insulting QPR defender Anton Ferdinand, who is black, during a game in October. Terry faces a criminal trial in July over the incident, which led to him being stripped of the England captaincy for the European Championship.
Ferdinand was spared having to decide whether to shake Terry's hand before an FA Cup match in January after the Football Association allowed the sides to skip the ritual.