Villa chief Martin O'Neill consulted McCarthy when it became clear that Dunne's days at Manchester City were numbered following the signing of Kolo Toure and Joleon Lescott.
Now he will be looking to score for the third successive game when Villa take on Wolves at Molineux this weekend.
McCarthy said: "Dunney is a terrific player. He has been great for Ireland.
"I gave him his competitive debut against Holland in Amsterdam nine years ago and he was brilliant against Patrick Kluivert that night.
"He has had a really good career. He is solid. I am still not convinced that Manchester City have got in two better defenders than Richard Dunne.
"But I understand the need to change players around as well and get your own players in.
"I think he is one of the best defenders in the league. He put a lot of work into looking after himself. He is a top drawer player for me. I can't say any more about him.
"He is a fabulous signing for Villa. Martin O'Neill rang me up and I said exactly that. I said 'Take him tomorrow.'
"I even rang him (Dunne) and asked if he would come here. Whether we could have done it (I don't know) but I knew he was onto a club that might be pushing for Europe."
Wolves striker Chris Iwelumo could taste his first senior action of the season against Villa.
Iwelumo has been sidelined for six months with knee ligament damage and then a broken foot, but came through a midweek reserve game unscathed.
McCarthy added: "Chris will be in the squad. He was due back later than now, he has done well. He did really well in the reserves. It is great to have him back."
Aston Villa 11/10, Wolves 12/5, Draw 12/5