The England international impressed in his first Premier League campaign last term after Maddison ended up with seven goals and seven assists in 36 Premier League appearances.
Maddison was linked with a move to Manchester United last month following his breakthrough season after Leicester signed Maddison from Championship side Norwich City in the 2018 summer transfer window.
Wijnaldum was a key part of the Liverpool FC team that won the Champions League last season after he scored twice in a 4-0 victory over FC Barcelona in the second leg of their semi-final at Anfield.
The Netherlands international finished his third full season at Liverpool FC with five goals in 47 games in all competitions for the Merseyside club.
When Nicol was asked about who the Reds should sign this summer, the former Liverpool FC defender told ESPN FC that Jurgen Klopp needs to consider replacing Wijnaldum with Maddison.
Nicol said: “Maybe a starter, for me [he would be] a starter, James Maddison. He’s a player who does in my opinion all the things that Klopp wants his middle three to do right now.
“You put him in the middle. I’d suggest because Jordan Henderson’s the captain right now it’d have to be ahead of Gini Wijnaldum.
“I think Wijnaldum starts right now because he has a goal or two in him but for me Maddison would take over that because he has a goal or two in him [as well].
“He’s a guy that gets around, does the hard work, can get from box to box and has an eye for a pass.
“You’ve got a player coming in [in Maddison] who makes the starting eleven better already.”
Maddison moved to Leicester in a £20m deal from Norwich City last summer after an excellent 2017-18 campaign at the Canaries.
England manager Gareth Southgate has gone on to cap Maddison to highlight the 22-year-old’s progress over the past 24 months or so.
Liverpool FC finished in second place in the Premier League table last term after ending up a point adrift of champions Manchester City.
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