Speaking to ITV Granada Reports, drag artist Danny Beard, said Paul was a "trailblazer" for the queer community.
Danny, who is from Liverpool and the fourth winner of Ru Paul's Drag Race UK, said Paul O'Grady as a drag performer and an entertainer "set the tone for the rest of the world".
Paul died "peacefully but unexpectedly", his partner Andre Portasio on Tuesday 28 March.
The TV star and comedian from Birkenhead shot to fame with his drag act Lily Savage in the 1970s.
Paying tribute, Danny Beard said: "I moved to Birkenhead from Liverpool as a child, and Paul is a local legend there.
"To see someone from the same area as me doing the things I want to do... Paul is the most iconic British drag queen we will ever have.
"I don't think anyone is going to be able to cut the mustard quite like Paul O'Grady."
Danny, who is currently on a tour of Australia, said that he thinks people forget that "we created drag in Britain" and that it is people like Paul O'Grady who created working class personas and put them on stage.
He said: "I think Paul is going to leave a massive hole in the drag community and you only have to look at what's happening right now in the world, with places in America banning drag.
"We have to remember what Paul did for drag and look forward to the future."
O'Grady first created his Lily Savage persona at a gay pub in Camden in 1978, miming the words to Barbra Streisand's "Nobody Makes a Pass at Me" from the show Pins and Needles.
He told The Big Issue that Lily's iconic look, including her huge blonde beehive and glamorous appearance, was inspired by her aunt, who was a 'clippy', or bus conductor.
"A lot of the stuff I used to say as Lily stemmed from those days. They were all funny. I didn't realise at the time."
After a spell in Denmark, O'Grady learnt fire eating to diversify his act and continued to pursue his drag act under the name Paul Monroe, named after Marilyn.
He was caught up in the 1981 Toxteth riots while performing with a friend in Liverpool.
In March 1983, he joined the Equity union, which meant he could take part in theatre productions.
He and a friend joined with drag artist David Dale to form an act known as "LSD", which stood for "Lily, Sandra, and Doris".
O'Grady used his act to speak out on issues affecting the gay community, especially during the HIV/AIDS crisis.
O’Grady’s career as Savage took off with TV and radio appearances in character and he was eventually asked to take over from Paula Yates as The Big Breakfast presenter as Savage from 1995 to 1996.
He took on chat show The Lily Savage Show for the BBC for a short run in 1997 and later that year had success as the host of a revived version of gameshow Blankety Blank, which ran until 2002.
O'Grady chose to retire the character in 2004.
It’s A Sin actor Nathaniel J Hall has said Paul O’Grady showed everyone “how important it is to be bold and to be brave” as he paid tribute to the beloved presenter.
Hall, who starred in the drama series which explored the HIV/Aids crisis in the 1980s, said: “Paul was a dreamboat … He was a kind and compassionate person and his charity work with HIV organisations and dog charities showed that.
“He showed how important it is to be bold and to be brave, his passing reminds people that life is short, to grab the bull by the horns.”
Paul O’Grady made life “easier” for the LGBT community and his impact on “culture, existence and humanity” resonates across the UK and world, fellow comedian Eddie Izzard said.
Izzard said: “If you track back how LGBTQ was seen, over the decades … it got gradually easier and easier and easier, and he definitely had a good part in saying, ‘I’m a drag queen’.
“The fact he was out and openly gay, was cool and everyone, everyone began to calm down, because, obviously, other people who are LGBTQ came out over the years, but he was a good part of that.
“He was just very human … It’s great that he added so much to culture and existence and humanity in the United Kingdom, and that resonates around the world.
“I can’t believe it. We have lost a unique talent – and I’ve lost a dear friend. We were all lucky to have Paul in our lives.
"My heart goes out to Andre, Paul’s family and friends. Oh, how I’ll miss him.”
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