Former team-mate Sir Bobby Charlton led the tributes in front of about 300 mourners at the service at All Souls Church in Weaste on Wednesday.
Earlier, crowds gathered at United's Old Trafford stadium to watch the funeral cortege pass.
Sir Bobby joined other Munich survivors Harry Gregg and Bill Foulkes, along with United greats Denis Law and Nobby Stiles, to pay their last respects.
He revealed that Manchester-born Scanlon befriended him when he arrived in the city from the North East, describing him as "kind and generous".
Albert was, without question, a Busby Babe through and through
Sir Bobby Charlton
In pictures: Albert Scanlon funeral
Describing him on the pitch, Sir Bobby said: "He had a gift, he had blistering pace. He was sensational when he was on song."
He said Scanlon could have played for England but after the air crash his game did not progress and he eventually retired from football.
"Albert was, without question, a Busby Babe through and through," he added.
"I always have fond memories of him, certainly the fans will remember him."
Scanlon, a boyhood Manchester City fan, made his debut for Sir Matt Busby's Manchester United first team in 1954 and was a title winner in 1956 and 1957.
Sir Bobby Charlton led tributes to his former team-mateHe was on the ill-fated flight from Belgrade to Manchester following a European Cup match in February 1958. The aircraft crashed in Munich after refuelling.
After the crash, Scanlon was among the survivors while eight of his team-mates and 15 other passengers and crew lost their lives.
But despite suffering severe head injuries he went on to play for United the following season, scoring 16 goals.
Father Shaun Braiden told mourners the Busby Babes had made Manchester United what they are today.
He added: "We honour Albert today as a legend, because his story is that which legends are really made off, all the ingredients are present.
"For the moment a true red has come marching in, but the real saints are bidding him 'Welcome."'
The funeral service ended with the traditional football hymn, Abide with Me, before a private internment with close family and friends.
Scanlon left Old Trafford in 1960, ending a six-year association with the club.
After his departure he played for Newcastle, Mansfield and Lincoln.
Source: BBC Sport
Source: BBC Sport