Lampard is poised to make his 100th England appearance if, as expected, he features in Tuesday's crucial FIFA World Cup qualifier against Ukraine in Kiev.
At 35, the midfielder remains an important player for club and country, but had been linked with a move to the MLS before penning a new one-year deal at Stamford Bridge back in May.
And England captain Gerrard is pleased that his international team-mate remained in the Premier League rather than follow in the footsteps of the likes of David Beckham and Thierry Henry by heading to the United States.
Gerrard said: "Of course he made the right choice.
"He was too good for LA Galaxy in my opinion. Everyone saw how good he was at the end of last season for Chelsea.
"I would have supported his decision if he had decided to go to LA Galaxy, but for me he still had a lot to offer in the Premier League and certainly for England.
"I would have been sad if he had moved away because he is a great player."
Lampard made his international debut against Belgium in October 1999 and has scored 29 times for England, winning 60 of his 99 outings.
Gerrard reached his century milestone for England last November and has paid tribute to Lampard's career.
The Liverpool skipper added: "No one deserves it more than he does. He has been tremendous for club and country.
"He has been a top player and hopefully I will be on the pitch to share that moment with him because I have been with him all the way through.
"He is a good friend of mine and I can't wait for him to get it."
