Many people had expected O'Driscoll to captain the side following an injury to usual skipper Sam Warburton, but the Irish centre's name was a shock omission when the squad was announced.
The decision has drawn plenty of criticism from former players, pundits and fans alike, but Gatland believes that it is the right decision for purely rugby reasons.
"It's only hard because you are making the decision by using your head and not your heart. Then you realise that what comes of making a decision like that is all the peripheral stuff - not the rugby decision - because it becomes a major story for 48 hours and it becomes a debate," said Gatland.
That is the process I've gone through myself. If I go back to the UK after this and say 'did I make the decision because I believe it's the right decision? or 'did I make the decision because it was the right political decision or sentiment?' I have to put hand on my heart and say it's the right rugby decision. I would hate to think we had made calls on trying to avoid criticism or public favour or perception.
"He is not finished yet. He has been a big part of the story. He played in the first two Tests and he has been a part of a win and a loss. He is obviously very, very disappointed, as any player would be, but it's like everything, it's a learning process."
O'Driscoll has rarely had to deal with being dropped for an important match, and Gatland believes that such circumstances could make it harder for the player.
"It's kind of hard when you've been the number one in your position for so long, for 15 years, and first choice on every team you've been a part of, and on every Lions team you've been the first choice as well," he added.
"There have been a lot of people under him who have experienced the disappointment of Brian O'Driscoll always being selected over them. It's just part of sport, isn't it?
"Sometimes it happens and we've made a really tough decision, a tough call and that's part of it."
O'Driscoll is currently on his fourth tour with the Lions, having made eight Test appearances, scoring one try.