The North London side tried to trigger a non-existent release clause in the Uruguayan's contract when they bid £40 million and one pound for the services of the striker in 2013.
The bid caused uproar in the Anfield corridors of power at the time, and even caused Liverpool owner John W Henry to ask "What do you think they're smoking over there at Emirates?" on Twitter.
Suarez eventually stayed with the Reds and his 31 goals almost fired them to a Premier League title as he picked up the FWA and PFA Player of the Year awards.
And Gerrard, who was instrumental in keeping the striker at Anfield last summer, has finally revealed how he changed the mind of his former teammate - by claiming Suarez was above a team of the calibre of the Gunners.
The Mirror quotes him as saying: "Last summer, when he was out in the cold and training on his own, that's the conversation I had with him. I said, 'Don't go to Arsenal.' With all due respect to them, I said to him that he was too good for Arsenal.
"I said, 'If you score 30 goals for us and win the PFA Player of the Year, the press Player of the Year' - and believe it or not I knew he was going to win them - 'they will come back for you.'
"You know what I think of him, I love him to bits and I'm his number one fan as a player. I spoke to him before he went, and he was so thankful to the club for all the times they stuck by him."
Suarez left the Anfield giants earlier this month for a Barcelona in a blockbusting deal, worth around £75 million.
Gerrard claimed that while it was his own personal dream to one day play for Liverpool, he does not have a problem with Suarez leaving for Barca, as it was his to one day turn out for the Spanish giants.
“I just thought, for his own sake and to get respect off the Liverpool fans, he had to give us at least one year," he added. "A lot of people might still think he should have given us one more, but that’s the same with most foreigners.
“My big dream was to play for Liverpool, and the foreign players’ big dream is to play for Real Madrid or Barcelona - that’s a fact.”
Brendan Rodgers' side begin their new Premier League campaign against Southampton on August 17.