The Egyptian, who has scored 31 goals in the Premier League this term, was last night crowned PFA Player of the Year and has helped lead the Reds to a Champions League semi-final against Roma, with the first leg being played on Tuesday night at Anfield.
Keegan, also a diminutive forward, left Liverpool for Hamburg in 1977 after winning three Premier League titles and a European Cup with the Merseyside club. He would go on to claim the Ballon D'Or in 1978 and 1979.
And although McDermott said you can't compare the two as players, the three-time European Cup winner is adamant Salah can reach the lofty heights of his former teammate if he consistently delivers campaigns like the one he is currently enjoying.
"It's been beyond belief," McDermott told Tribalfootball. "We knew him from his Chelsea days and obviously he's been at Roma. Mourinho didn't fancy him or whatever happened and got rid of him. We've got him now and he's been an absolute revelation."
On the Keegan comparison, the 66-year-old added: "Two different types of players but Kevin never stopped running and [Salah's] the same.
"People forget Kevin won the World Player of the Year twice, that's how good he was. I could put Salah in that category but he's got to do it over three or four years.
"There's no reason he can't. He has pace, footwork, he is sharp and knows where the goal is. He's been an unbelievable player. He'll carry on next season and the year after hopefully."
Salah's performances have reportedly brought about interest from Real Madrid. But McDermott believes both the player and the club will want to continue their flourishing relationship.
He continued: "I know there is speculation he's leaving this season, but I can't see that happening one bit.
"Jurgen Klopp won't let him leave and I don't think he'd want to leave anyway cause he's really enjoying his football."
You can read more about Terry McDermott's incredible life and career in his biography, Terry Mac: Living For The Moment - My Autobiography, which can be bought by clicking on this link - https://www.amazon.co.uk/Terry-Mac-Living-Moment-Autobiography/dp/1910335584.
You can follow Andrew Maclean on Twitter: @andrewmaclean30