Ferguson pointed to Barcelona`s surprise Primera Division defeat to promoted Hercules as proof that "football throws us surprises".
Hercules caused one of the biggest upsets in recent Primera Division history after claiming a 2-0 win over the two-time reigning champions at the Nou Camp on Saturday.
While many are predicting a routine win for United against the Scottish champions, Ferguson is having none of it.
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With United still reeling from their last-gasp collapse at Everton, Ferguson has stressed Rangers cannot be underestimated.
He said: "People say this is a mismatch but they said that about Barcelona on Saturday night.
"Football throws up surprises. We are never going to forget Rangers' history and this will be a tough game.
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"I know Walter Smith personally and he has worked with me twice. I know how astute he is and how good a tactician he is. I can almost see that little brain working at the moment."
The encounter with Rangers presents Ferguson with the kind of decision he relishes.
After confirming he is looking past Gary Neville and Ryan Giggs as his captain, the return of Rio Ferdinand from the knee injury he suffered on the first day of World Cup training with England means Ferguson has a straight choice between the Three Lions skipper and central defensive partner Nemanja Vidic, who has performed well in the role so far this season.
It is a not insignificant choice, which may reveal much about how much trust Ferguson has in Ferdinand's body given the number of matches the stylish central defender has missed over the past two years.
Rangers boss Smith has no intention of following in the footsteps of Ferguson by having a change of heart over retiring at the end of the season.
The 62-year-old revealed in the summer this would be his final year in football before making way for his assistant Ally McCoist to replace him in the Ibrox hot-seat.
Ferguson has urged his close friend and former colleague to have a rethink, claiming he still has too much to offer the game.
But Smith said: "It was nice of him to mention it but I've made my decision. I'm leaving at the end of the year and that's it."
Ferguson himself almost retired in 2002 but subsequently changed his mind. Then, in April this year, he dismissed rumours he was set to quit at the end of this season.
"It doesn't surprise me," said Smith of Ferguson's determination to prolong his managerial career. "I think at one stage, when he was probably around the same age I am at the present moment, he maybe felt he had enough.
"Then he got the second wind and decided to stay on. I'm sure everybody at Manchester United will be delighted he made that decision. I think the level of player that he is working with is also keeping him going.
"My own situation was completely different. I had no intention of staying even this length of time when I first came back to Rangers.
"The two situations are both on a parallel but I think every manager needs a level of motivation as well and I think Manchester United motivates Sir Alex as much as the other way around."
The last meeting between the two clubs in 2003 resulted in a 4-0 aggregate win for United - before Smith's return for a second spell at Ibrox - and the Barclays Premier League giants are overwhelming favourites once again.
Smith said: "The first game in the Champions League is always a big game for everybody. The first game always brings an added excitement but especially when you come to play at a venue like Old Trafford.
"We will look to do well. We had a reasonable level of form away from home in last year's Champions League but our home form let us down. Hopefully we can continue our decent run of away form and improve our home form."
However, Smith is realistic about the size of task which faces his players.
He said: "Damage limitation? I think that will probably be a necessary perception from my point of view.
"If you could tell me of any team in the world who will come here with a solely attacking intent then I would be very surprised.
"Every team has to look at being compact defensively. There are few teams, if any, who come here and don't give the proper footballing view to defending.
"There have been little bits in our performances that haven't been up to the standards we have set in recent seasons - but hopefully the importance of this game will bring a proper focus."