It was confirmed on Monday that the Arsenal winger will be out for up to six months having suffered an anterior cruciate ligament injury during their FA Cup victory over Tottenham at the weekend.
With the World Cup getting under way in early June, reports of the injury caused a significant blow for England, with Walcott among the favourites to make Roy Hodgson's squad.
However, despite admitting it is a major loss for England, Gerrard believes the absence of Walcott will allow some of the Premier League's rising stars a chance to shine for their country.
"I was sick in the stomach because he's not going to the World Cup. I think we're going to be missing a key player, a player capable of getting goals and assists at that level," he told Sky Sports' Geoff Shreves in an exclusive interview.
"But what it does is gives an opportunity to another player in those positions, the emergence of Andros Townsend, Raheem Sterling, Alex Oxlade-Chamberlain, it gives a chance to another top player."
Liverpool captain Gerrard admits the incident did not cause concerns between himself and Hodgson but revealed his relationship with the national manager is thriving.
"I speak to [Roy Hodgson] every single day when I'm with him, of course, I've got a great relationship with him, obviously from when he was Liverpool manager," he added.
"I'd never worry about picking up the phone to him, he's very approachable and we have good, healthy dialogue all the time."
Hodgson instated Gerrard as captain when he took over as England manager in 2012 and the midfield stalwart admits being leader of club and country is a goal he has always worked towards.
"I love responsibility as a player so to be captain of club and country is a dream come true and something I've always strived for," he said.
"The first plan was to become Liverpool captain and show everyone I am capable of doing that job, being a successful captain and a captain that players respect and that the fans can relate to.
"I think showing everyone that for a number of years has helped me become England captain.
"It's every day of my life, it's not just when I meet up in September, October of November, it's every single day you have the responsibility of being the leader of both teams."
Brazil will be Gerrard's fourth World Cup and the 33-year-old England skipper is determined to seize the moment, understanding he will never have another opportunity.
"This is probably my best chance to surprise this country and countries throughout the world," he claimed.
"Knowing it's going to be my last World Cup, getting qualification was a massive high but now I want to go and make the most of my last one."