The 35-year-old centre-back announced he will hang up his boots at the end of the season despite stellar recent displays against Arsenal and Manchester City.
Dalglish, who managed Carragher at Anfield between 2011 and 2012, told the Liverpool Echo: "Jamie's decision was a surprise to me because he has just played as well as anyone against Arsenal and Manchester City.
"I thought he had a bit left in him yet but he knows himself better than anybody and if he thinks it is time to hang up the old boots that is totally his prerogative.
"It is always a difficult decision for a footballer - as hard a decision as you can face as a professional.
"It is more difficult because playing is the best part of your career - especially at the level he has played at and is playing at."