Phelan had been at Man Utd on and off since 1989 when he was axed by David Moyes in 2013 and he faces the Reds for the first time as a boss for Hull City on Saturday
He is caretaker boss at the Premier League newcomers following Steve Bruce's shock exit during the summer.
Having been at Bruce's side during Hull's promotion last season he has won his first three matches in temporary charge to steady a club in stormy waters and wants the role permanently.
Phelan went through the card of silverware as a Manchester United player and then as Old Trafford first team coach and finally assistant to Sir Alex Ferguson.
But when Fergie retired in 2013 and David Moyes became his successor, Phelan was controversially part of the cull as a new backroom team was brought in.
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It has been cited as one of Moyes' major mistakes.
But Phelan is not bitter and will only feel pride on Saturday night when Jose Mourinho takes United to Hull.
“Having been successful at Old Trafford and having thoroughly enjoyed being a player, a coach and an assistant manager at United it is a terrific feeling knowing you are going to be in charge of a team to play against them, albeit as caretaker but it is something special,” Phelan told MEN Sport.
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“I don't think there is anything I have to prove to Manchester United, my whole chapter of being part of the club's history stands on its own. I am not in it on Saturday to gain any credibility out of it. I have done my job at United and did it reasonably well. But I may have to beat them to get the job at Hull! That's the only reason I want to win.
“When you have put so many years in somewhere like I did at United and you have put so much time and effort into it to make it successful there is a point where you wonder why does it have to end.
“But in football there is a tendency to make decisions whereby later people wonder why they are made. However, it is water under the bridge now.”
United have had a traumatic three seasons in the post-Fergie era under Moyes and Louis van Gaal.
Phelan watched from a distance and was concerned about where the club were heading.
“I must admit at one point I was concerned about what the future might hold for Manchester United over the last few years,” he said.
“But there seems to be a little bit more direction now and more of a settled atmosphere and that is showing. They have invested massively over a period of three years and at some point you would like to think they are going to get it right.
“We are talking about Manchester United and you always expect them to be there in amongst it. Expectations are huge and that will never go away. That is part of why you work there and why people want to work there because you want to be part of that expectation and have that drive to achieve.
“But there has been a dip in form and I have wondered what direction it is going in. Eventually though with the tradition and expectation you know it will come back around again.
“United as a club has looked at themselves and decided we have to start producing again. They have invested massively in the last three years and they have to start producing consistent results to back that up.
“It is early days but it is looking better.”
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