Panucci won LaLiga, the Supercopa de Espana, the Champions League and the Intercontinental Cup during his three-year spell in Madrid before moving to Inter, where he struggled to recapture his form and fell out with then coach Marcello Lippi.
The 45-year-old gave a positive assessment of Ronaldo's prospects in Serie A following his €100 million (£88m) move to the Serie A champions, but believes that the Portugal icon might live to regret his decision to leave Madrid.
"I wanted to leave Madrid and it was the biggest foolishness of my sports career, and I regret it now.
"Cristiano is going to win because he is too good a player not to do it. It's normal madness for Cristiano, he's the best in the world.
"He's a very smart signing who is going to give other great players a push to come to Italy.
"Being a champion is in his blood."
Panucci also believes that Madrid could face a difficult period of transition following Ronaldo's departure in a summer which has also seen three-time Champions League-winning head coach Zinedine Zidane leave to be replaced by Julen Lopetegui.
Zidane failed to retain the LaLiga title in 2017-18 after winning it a season earlier, but Panucci believes the Frenchman will nevertheless prove hard to follow.
"It could be a difficult season for Madrid," he said.
"Zidaneis leaving, Cristiano is leaving. It's not easy to substitute them and more after winning three Champions Leagues in a row."
