England's World Cup winning No8 believes the lessons of 1974, 1997 and 2005 suggest the Munster skipper would be the best man for the job this time around.
O'Connell and Ireland team-mate Brian O'Driscoll are widely considered to be the front runners for the coveted role and Dallaglio believes the 29-year-old lock should be the man who is handed the armband against the Springboks.
"If you look back at history, the two Lions tours that have been won in South Africa were captained by second rows - Willie John McBride in 1974 and Martin Johnson in 1997 - so history would point towards O'Connell," Dallaglio, who toured New Zealand with both O'Connell and O'Driscoll in 2005, told the Daily Telegraph.
"Brian O'Driscoll is a former captain of the Lions but while he would do a wonderful job of captaining this tour, I felt he had quite a traumatic experience in New Zealand so it might be better for him to concentrate on being the absolute world-class centre that he is. But it is a tough call either way.
"There will be a captain for each game so we need other players who can take on that mantle of leadership, and Ryan Jones and Phil Vickery also come into the equation."