The 21-year-old was Italy’s two-goal hero on Thursday night as the Azzurri defeated Germany 2-1 in the Euro 2012 semi-finals to set up a date with Spain in Sunday's showpiece.
Redknapp, who is currently unemployed after departing White Hart Lane earlier in June, lauded the striker for his performance and admitted he once attempted to loan the Italian while he was plying his trade at Inter.
“You never know what you're going to get with Mario Balotelli but one thing is certain - he is a major talent,” Redknapp told Sky Sports.
“He stunned Germany in the Euro 2012 semi-final and his second goal was fantastic.
“I actually tried to sign him for Tottenham before he went to Manchester City. I'd admired him for a while and I went over to Italy to watch him play. I was impressed and I met up with him too.
“We wanted him on a loan deal but his club weren't keen and it never happened. Shame because he's definitely got it and, at only 21-years-old, he'll be terrorising defenders for many seasons to come.”
Focusing on England’s Euro 2012 campaign, one which Redknapp was widely tipped to lead before Roy Hodgson's appointment, the 65-year-old sympathised with his compatriot.
“We did okay. Roy came in at a difficult time,” the ex-Spurs boss added.
“We came out of the group which wasn't the most difficult group in my opinion and then didn't play very well against Italy.
“I don't think anyone expected a lot more but I still think we've got players in this country that are capable of doing a lot better and hopefully Roy will take them on now.
“He's got time to work with the team but I think it's long term."
Redknapp believes that significant improvements are necessary at grass roots level if England are to have any chance of competing with the likes of Italy in the future.
He cited midfielder Andrea Pirlo as the type of player the English system would never cultivate with their current “lumping the ball from back to front” approach.
“Unless someone sorts it out and we start playing and producing people that are technically better and are willing to play from the back and receive the ball and play like Italy played against us where they passed the ball - like the top teams in the world - they are never going to improve,” Redknapp continued.
“The problem is they can set up Burton and have the kids there and work on their skills and on their technique. The problem is that they then go to football clubs and it depends how the clubs play.
“If the clubs are not going to play it's no good having somebody who is going to be the new [Andrea] Pirlo and that kid goes to a club where they are lumping the ball from back to front 60 yards.
“Unless they are going to play through these people and they are going to encourage more and more teams to play football then we are always going to have that problem.”