Bayern were in the hunt for a right-back during the recently completed transfer window and went through a number of targets, including Ajax teenager Sergino Dest.
Dagba has now revealed that Bayern were also interested in his services, but he opted to stay at PSG instead.
"Bayern Munich? There were talks with my agent. We then talked to each other and made the decision to stay in Paris," Dagba told Canal Plus.
"I don't regret this decision because there is a competition every season."
The 22-year-old is currently battling with Thilo Kehrer and Alessandro Florenzi for minutes with the French champions and has made five Ligue 1 appearances thus far in 2020-21, though only one of those was from the start.
Despite the fierce competition for minutes, Dagba believes he will get an opportunity with Thomas Tuchel's side.
"We all want to play, that's for sure," Dagba said. "There will be one game after the other and I'll definitely get my chance."
Dagba added that he may consider leaving should he not receive his share of playing time this season, but he feels he has the confidence of Tuchel.
“The goal is to win over PSG," the France Under-21 international said. "They have always given me my chance, I feel the confidence of the club.
"If [my playing time is] blocked ... it will be necessary to consider leaving. But I have always felt this confidence from the club and I am happy here.
"I always feel the same confidence from the coach, I always give everything for him on the field."
Dagba and PSG will return to the pitch after the international break with a match against Nimes on Friday at Stade des Costieres.
After losing their first two matches of the season, PSG have rebounded with four consecutive victories to move into fourth place, two points off table-topping Rennes.