Rooney's future at Old Trafford was in doubt early last week when Sir Alex Ferguson revealed the striker was not looking to agree a new deal.
City had been favourites to sign the 25-year-old, but the striker performed a U-turn on Friday to sign a fresh five-year deal with United.
Neville is happy that his team-mate will be staying with the Red Devils and believes it is the 'best outcome' for all parties.
In his column for the Sunday Times of Malta, Neville wrote: "When our top players sign long-term contracts it obviously gives us a boost. Wayne is staying and now we look forward to winning trophies with him in our team.
"The main thing is that after a difficult week the best outcome was reached for all parties. Except perhaps Manchester City..."
Rooney is currently recuperating from an ankle injury with his family in Dubai, but could yet be fit for the Manchester derby on 10th November.
Neville is confident that the player will quickly be forgiven for questioning the club's ambition, and added: "He has apologised to the fans and everyone else connected with the club so we have to put it to bed now.
"While there will always be fall-out from an incident like this, as soon as we get back to playing football and Wayne gets back on the pitch it will all be forgotten about.
"The fans have obviously been watching it very closely. While the statement attributed to Wayne last Wednesday didn't go down very well, we all make mistakes in our lives and we've all done things we regret. United fans will accept that.
"He has always given 100% when he has pulled on a United shirt, and that is the overriding factor.
"No one can doubt that he loves playing football for this club and I have no doubt the fans will support him through the rest of his career here."
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