Writing in a column for 'ESPNCricinfo', Chappell argued for Kohli's elevation as soon as possible after India's shambolic recent tour of New Zealand in which the team failed to register a single win in any format.
"Dhoni is a brilliant captain in the shorter versions of the game, and a master at timing his run to the finishing line as a middle-order batsman. However, as a Test captain he's too reactive and has a tendency to let the game meander along, like an absent-minded professor strolling in the park," Chappell wrote.
"His conservatism allows the better players among opposition batsmen too much freedom and too many easy runs. Consequently, big partnerships, like the match-saving one by Brendon McCullum and BJ Watling, build too often," he said referring to the drawn second Test in New Zealand which India seemed like wining inside three days at one stage.
"Dhoni really should have been replaced as Test captain following India's disastrous tours of England and Australia in 2011-12, when his teams displayed little fight in losing eight matches on the trot."
Chappell said Dhoni seems to lack ideas when the team flounders.
"When a captain starts to hinder his team, he needs to be replaced. During that horror patch, Dhoni was unable to inspire his team and looked like a skipper just going through the motions. There's no doubt that a captain -- even the best of them -- can stay on too long, to the point where he loses his team," he explained.
"Dhoni did bounce back when he orchestrated a convincing whitewash of Australia at home. There's no question he's a better captain under familiar conditions. He's at his best with spinners operating regularly, whereas when conditions are more in tune with seamers he struggles."