The England star will lead out Liverpool in Wednesday's Uefa Cup clash against Olimpija Ljubljana.
Reds boss Houllier revealed the decision was taken as a reward to Gerrard's growing influence on the team.
The Frenchman also feels the move will help ease some the pressure on Finnish star Sami Hyypia after an indifferent start to the season.
"I have decided to move the armband to Steven Gerrard. Stevie will lead the team tonight and in the future," Houllier told the Liverpool Post
"I have thought long and hard about this. This is not something which should be seen as against Sami. He has been a good captain for us. He has lifted six trophies as captain.
"But I have considered a number of issues. Firstly, I think Stevie has certain leadership qualities which I spotted very early in his career. When he was young, all he needed was time to mature. Now he is 23 and he is ready.
"There has been a maturing in his game and his personality.
"The second thing is I think this decision will help Sami's game too. I think he was ready to take on too much responsibility at times.
"Obviously I spoke to Sami and his response was typically first-class. He respected the decision. There was no bitterness or resentment and I know Sami will recognise this is a decision I've taken for the team.
"I have three leaders in Stevie, Sami and Michael Owen, who are all inspirational in their own way."