The Wasps captain dislocated his ankle, broke his fibia and damaged ligaments when he slid into a tackle and was caught awkwardly under a pile of bodies.
Dallaglio arrived in New Zealand at the peak of his powers and seemed set to play a key role in the Lions' bid for a Test series win over the All Blacks.
Instead he has had to start dealing with the disappointment of having a second successive Lions tour ended early by a serious injury.
But he is in a positive frame of mind and is already looking forward to his return for club Wasps.
"I knew my leg had been caught in the ground and it was not facing in the right direction," Dallaglio said from his hospital bed in Auckland.
"I had fractured and dislocated it. I was in a lot of pain and James (Robson, the Lions doctor) was able to put it back in on the pitch.
"He had never had to do that before and once the ankle was back in, the pain subsided.
"I have broken the fibia - the smaller of the two leg bones - and there is trauma to the ankle ligaments. I have had five screws and a metal plate inserted in the leg.
"I never thought that my career was in doubt. My only concern at the time was that my tour was over.
"I was lying there thinking: 'I have never been taken off on a stretcher before in my career'.
"I knew straight away that my tour was over. I knew that if it was an injury that I couldn't get up from then it was pretty serious."
Dallaglio arrived at Rotorua hospital still dressed in his Lions kit, to be greeted by a medical team who had been watching the game on television so knew just what to expect.
They realigned his ankle joint to ensure it heals correctly and Dallaglio was then driven back to Auckland for the operation, which was performed by surgeons who work with the All Blacks.