Wales international, Woodburn, the youngest goalscorer in Liverpool's history, made nine appearances for the Reds' first team last season but has made just one 45-minute substitute appearance in the current campaign despite some encouraging cameo performances in World Cup qualifiers for his national side.
However, his absence from Jurgen Klopp's plans has been Gerrard's gain as he has made Woodburn, who turned 18 on Sunday, captain for his Uefa Youth League under-19s side.
He is playing domestically for the Under-23s while also training with the first team but Gerrard has also got to work with him and has been encouraged by what he has seen.
"I think Ben needs to play at the moment so if Jurgen doesn't need him at first-team level it's an excellent opportunity to come and play with his friends who he came through the system with; be the captain and leader in this team and set the example," said the former Liverpool captain.
"I am pleased with Ben because his attitude and mentality when he comes down to train at the academy is 10 out of 10. That gives everyone a lift.
"His mates are so happy to have him around and he is smiling and playing around with them so it is a great mix.
"We all know Ben is going to play different types of football this year, he knows that and is happy with that.
"The challenge is when he comes down to this level can he approach it like a first-team game and so far he has been excellent.
"I think the reason we are getting positive performances is because everyone is bouncing off him."
On his decision to hand Woodburn the armband for Liverpool's three matches in the Uefa Youth League, where they are top of their group after two wins, Gerrard added: "I haven't just given Ben the captaincy because he is Ben Woodburn, he has got it on merit and he will lead by example in his performances.
"He has done that in training and he has also done it in the games so we are really happy for him."