Balotelli looked sharp on his Liverpool bow at White Hart Lane on Sunday as Brendan Rodgers' men ran out comprehensive 3-0 winners.
The Italy striker, signed from AC Milan last week, missed two good headed opportunities early on but linked up well with Daniel Sturridge and Raheem Sterling before being withdrawn just after the hour.
"I thought he was terrific," Gerrard told Sky Sports. "I think all eyes were on him; wondering whether he was going to work out, would he hold the ball up for us? All credit to him, I thought he was terrific for an hour.
"If he plays like that for us every game, he'll continue to improve and he could be the difference as to whether we compete or not."
Balotelli arrived at Anfield with a fair amount of baggage from his previous spell in the Premier League with Manchester City, but Gerrard had nothing but praise for how he has behaved so far.
"To be honest, I don't really have an opinion of people until I work with them myself and he's been terrific since he came in - he's worked hard, he's taken all the tactics on board of how we play with and without the ball," added the 34-year-old.
"He'll only improve with a manager like Brendan. He's seen how the rest of the lads work and behave and he'll have to follow suit - that's his only option."