The midfield powerhouse scored 24 goals in all competitions last season as City won their second Premier League title, but he is yet to find the net this term.
Dalglish has said that Toure's lack of appetite for defending during their 1-0 defeat to Bayern Munich in midweek summed up his below-par showings.
"It's partly because he's such a good player that you notice when he slips from his high standards, but he has been disappointing this season, and he was disappointing again in the defeat to Bayern," the former Liverpool boss told The Mirror.
"He isn't showing anywhere near the same energy he put into matches last season. He looked interested when he had the ball, but then he looked uninterested when he didn't have it.
"I don't know what it is with Toure. There have been suggestions he's not fully fit. There was a period where he was supposed to be unsettled. Whatever it is, he has not come close this season to looking like the inspirational figure he once was."
Manchester City take on table-topping Chelsea at the Etihad Stadium this afternoon and you can follow the game live on Sports Mole from 3pm.