The captain has yet to start a game this season after being sidelined for almost six months with a groin problem, and Dalglish feels he is now ready to take the team forward.
Furthermore, the Scot suggested that the skipper and vice-captain Jamie Carragher can carry on playing for a long time and hinted that they could be given new long-term deals.
When asked about Gerrard's age, Dalglish told reporters: "He's not on a zimmer frame yet, you know - he'll still be charging forward for us. In fact, he's fitter than ever.
"I haven't got a crystal ball and don't know how long he can keep on playing. Maybe once he's fully back into the swing of things he will have a better idea himself.
"Put it this way, he's probably fitter than he was before, and he was a massive asset to this club. Anyone who's an asset to us, I'm sure the club would look forward to keeping them.
"Stevie's been fantastic for this club and everyone would want it to go on as long as possible. He's always been a fabulous asset and long may it continue.
"For me, both Stevie and Carra are fantastic examples - two people everyone in the dressing room can look up to, and that is the most important thing."
Dalglish confirmed that director of football Damien Comolli will be handling any contract negotiations but hinted that he would prefer Gerrard and Carragher to be given long-term deals.
"I don't have a figure in mind - and Damien's never had one in mind about years, in terms of when you get to 30 you only get a one year contract or whatever," Dalglish added.
"For me, you just judge the player on what he does on the pitch, it doesn't matter what age he is - I got a long contract when I was 33 that I couldn't believe. There is no given for anyone, it doesn't matter what age you are.
"If you're 20 and not making a contribution, you won't get a contract. If you're 30 and making one, you have a better chance. But I am not rigid over that.
"If I was asked for my opinion over how long someone's contract should be, I don't have any hard and fast rules. Everyone's different; some people can last longer than others. Look at Craig Bellamy, who's 32 and as fit as anyone."
Dalglish also praised Liverpool's owners ahead of Saturday's tie with Manchester United, which marks the one-year anniversary of John W. Henry and Fenway Sports Group's purchase of the club.
Henry was responsible for bringing Dalglish back to the dugout and the Liverpool legend has compared working under the American to Sir John Smith and Peter Robinson, owners of the club when he was first manager.
"The highest compliment I can pay is they are as good as the people who ran the club first time I was here - and that's a hell of a statement because Sir John and Peter were as good as anyone they have ever had at this club," he said.
"John, Tom and the rest of the investors have been absolutely fantastic and I wish them a happy birthday.
"Getting a win would put the icing on the cake, but the result won't take away how fantastic they've been."United are in a position where everybody wants to be – top of the league. It’s no point looking on enviously.
"They have set the standard for everybody and it’s up to us to take up the challenge. United are a fantastic team.
"We know it’s going to be a difficult game but they are thinking exactly the same thing.”