Walcott ruptured the anterior cruciate ligament in his left knee in Arsenal's FA Cup win over Tottenham earlier this month, ruling him out for the rest of the season and a trip to Brazil in the summer.
Sterling, who turned 19 at the start of December, has reclaimed a regular place in Liverpool manager Brendan Rodgers' side in recent weeks, just over a year after winning his sole England cap in a friendly away to Sweden.
With England manager Roy Hodgson needing to look elsewhere for options following Walcott's injury, Gerrard says his Reds team-mate is the ideal candidate.
"Raheem's in top form at a fantastic time," said the Liverpool and England captain.
"I'm obviously disappointed for Theo with his injury, but I'm sure Roy Hodgson is looking out for who is going to replace him and Raheem's performances of late have been sensational.
"There are many candidates. (Aaron) Lennon's playing well, Andros Townsend, (Alex) Oxlade-Chamberlain's back. But if you are looking at like-for-like - pace down the wing, someone who can make, score and create - then Raheem has got a fantastic chance."
Sterling caught the eye in Liverpool's 5-3 win over Stoke on Sunday, turning in a performance that Gerrard is certain will have reminded Hodgson of the teenager's abilities.
Gerrard added: "I've said to him after the Stoke game, 'You keep your performance at that level and you are going to make it very difficult for Roy Hodgson not to take you'.
"Hopefully he can build on the confidence from his recent performances and finish the season really strongly.
"He's got all the tools to do it. It's up to him now. If you are a full-back you don't want to play against pace and it's pace when it's coming at you all of the time. He keeps going.
"Raheem's a fit lad who will be relentless, he'll keep going even if he makes a mistake. He's a team player too. Everyone knows Roy Hodgson. He likes a wide player who can defend as well. He's got everything going for him."