On Thursday, the 35-year-old announced that this would be his final campaign at the Reds after a decorated 16-year career.
Carragher played under Liverpool legend Dalglish for 18 months, lifting the Carling Cup before losing the FA Cup final to Chelsea in May 2012.
The England international impressed in 2-2 draws against Arsenal and Manchester City over the past week, and Dalglish said Carragher’s decision was a shock.
“Jamie’s decision was a surprise to me because he has just played as well as anyone against Arsenal and Manchester City,” Dalglish told the Liverpool Echo.
“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.”
Dalglish added: “We just have to be grateful that Liverpool has had a servant like Jamie,” added Dalglish.
“As a local boy it is always special and Jamie is a local boy who has never once got carried away with it all and who can relate to the supporters. That’s really important.”
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