The former England midfielder was admitted to hospital this week as he continues his battle with alcoholism, and was pictured looking a pale shadow of the man who once strutted his stuff beside McCoist at Ibrox.
Gazza has had a series of high-profile problems in recent years but the Rangers boss insists hope shouldn't be lost.
McCoist said: "People have tried to help him and I certainly hope he is not beyond that.
"You can never give up, that's for sure.
"Gazza needs help and there are always people willing to help.
"No one should give up. You just hope the help comes as soon as possible and that he takes the help and advice that's coming his way.
"It was a real shock for everyone today to see him like that. Gazza's younger than myself and Ian Durrant, he's only 47.
"It's just shocking. But he has an illness, people need to realise that.
"He has an addiction problem and it's a serious illness and that's why we can't give up on Gazza.
"When people are asked the question, 'You used to be an alcoholic?' they will reply: 'No, I'm still an alcoholic.'
"It's a sickness. Like every other illness, you have to keep treating it.
"At times you will take steps back the way.
"Gazza has progressed in the past and at times he's looked a lot healthier than this.
"But, sadly, it seems he has now taken a few steps back again."
Gascoigne's problems with drink have been well documented and, despite appearing to show improvements in his health, he now looks to have had a major setback.
McCoist is gutted to see the state Gazza is in.
He admitted: "I could not believe the front of the paper when I saw it today. The pictures of him are horrendous. I was utterly shocked, to tell you the truth.
"We were all talking about it this morning and we were all so saddened by what we saw.
"He just looks a poor soul and everyone has real major concerns as to where this is going to go.
"It goes without saying that everyone at Rangers - the players, the coaches and the fans - will all be praying for him.
"Gazza is in everyone's thought and I just hope he can now pull himself together and get the help he needs."