Warburton shocked world rugby with his announcement during the week, the 29-year-old calling time on an illustrious career after failing to recover from neck and knee surgery.
The flanker had been expected to link up with Cardiff Blues for pre-season prior to the announcement but Warburton felt he would not be able to get back to his best.
Speaking at The Open, O'Driscoll hailed his former opponent but backed Wales's next generation to fill the void left by its former captain.
"I think anytime a rugby player spends the guts of a year out, the writing's on the wall," O'Driscoll said.
"Considering how much he's packed into his 29 years he's been a remarkable player for Wales and the [British and Irish] Lions.
"He is a loss [for Wales], he's a real Test match animal and he's someone that always raises his game on the big stage, you've seen that on countless occasions.
"Besides his leadership, as an out and out seven I think there's not that many as good as him in world rugby.
"Wales have been fortunate they've got good players in Josh Navidi and [Justin] Tipuric that have played well this season so I'm sure it gives them a great opportunity but undoubtedly a loss for Wales's preparation for [the 2019 World Cup in] Japan."