Sportal.co.nz 04.Jul.2013Getty Images
Before the Lions team announcement in Noosa on Wednesday, there had been some talk of O'Driscoll being named captain in the absence of Sam Warburton, but instead Gatland became the first coach to drop the Irishman in his 15-year career.
The rapid recovery of Jamie Roberts from a hamstring injury sees him bump O'Driscoll from the side, with the powerful centre preferred due to his experience playing alongside fellow Welshman Jonathan Davies.
Meanwhile, Welshman Alun Wyn Jones, who was handed the captaincy duties, said he hopes his performances throughout the tour had earned him the surprise promotion.
Gatland made six changes overall to the side which lost the second Test in Melbourne by two points last week.
The Welsh coach broke the news to O'Driscoll before the official team was revealed to the media.
"I told him this morning, obviously he was disappointed, as anyone is disappointed, but he appreciated the fact that he was spoken to before the announcement," Gatland said.
"It's the first time that any coach has ever had that discussion with him in 15 years of rugby.
"So it's not easy for that to be the first time, but he's still going to be very important for us in the next 72 hours in terms of his experience and leadership and he's been involved in the first two Tests, but Jamie's back fit.
"And that's where Jamie's been given the nod, in terms of that partnership between Jamie and Jon Davies in the midfield. "
With the return of a handful of players from injury, the coaching staff deliberated long and hard over several selection dilemmas, according to Gatland.
"It was quite a lively meeting that we had with the coaches last night in terms of going through and making the final selection, it was tough, but we've come up with what we think is a side that's good enough to do the job on Saturday," he said.
Jones, who captains the Ospreys but has only been in charge for one Test match for Wales, says he plans to lead from the front.
"Hopefully I've been selected for the way I play and not necessarily the way I lead," he said.
"I played from the start of the tour with an eye on getting into the first Test, so to be selected in the position I am for the final Test is a pretty special moment for me personally, but obviously there's still a job to do. "