The 24-year-old moved to Real Madrid for a world-record £86million fee last summer, and has gone on to score 14 goals for the Spanish club at home and in the Champions League.
And Sherwood, who replaced Andre Villas-Boas as Spurs head coach in December, admits he would love to still have the Welshman in north London.
"I wish Gareth Bale was still here," he told reporters. "We saw in the Champions League what he can do at that level."
Bale's name came into conversation when the Tottenham boss was discussing another summer departure - Steven Caulker - who Spurs will face on Sunday when they host Cardiff at White Hart Lane.
While Sherwood may have had little power to stop Bale from joining the club of his dreams in Real Madrid, the 45-year-old says he would have done things differently were he in charge in the summer. For one, he would have kept Caulker.
"He wanted game time and more than the previous manager would guarantee him," said Sherwood.
"The club decided they would let the player go and they think they had a good deal. It is up to Steven to build on that and prove the club were wrong to let him go.
"He wanted to go and play. The only thing I could have done is say 'you will play more football'.
"There are too many side-parting 'Smedley' kids about. It is good to have a character, someone who might be harder to manage but is a good player.
"Steven is obviously a good player and he has been called into the England squad. He is a regular England international of the future, I have no doubt."
How different would Tottenham's season be if they still had Bale?
image: © James Boyes