The Rangers boss says Katic has been rewarded for his hard work on and off the pitch as he committed his future to the club until 2023.
Gerrard said: “I am delighted for him first and foremost, I think he deserves it. He is a player who comes in on a daily basis and he tries to improve every day.
“He is certainly someone who will put his body on the line for this club and he has certainly earned the contract extension.
“The message to Niko now is that this is that start again, you reset yourself and you go again and keep trying to play at that consistent level because he has become a fans’ favourite, he has got the utmost respect from my staff and myself.
Gerrard says the Croatian has all the right qualities needed for a centre-half in the Scottish Premiership.
He added: “I think he suits the league, there are still parts of his game that we need to try and polish up and improve on but if you look at the basics of what you need in this league to be a centre-half you need to be able to handle yourself in both boxes, you need to be physical, you need to be able to compete and you need to be mobile and he ticks all them boxes.
“All the main things are there with Niko now we just need to keep trying to polish and shape his game up.
Since joining last June, Katic has already played over 40 games for the club, and Gerrard can see a big future at Ibrox.
He explained: “We won’t keep anyone here who we don’t think has got a major part to play so we have got big plans for Niko and we want him to be here for many many years.
“He is a potential leader in the long run if he keeps finding his voice and I’m sure he’ll continue to come out of his shell as well so there’s still potential there that we need to unlock but he is in a fantastic place and we are delighted with him.