McGregor is under contract until 2023 after renegotiating terms a year ago but Neil Lennon has recently suggested he is worthy of a pay hike.
Former Celtic midfielder and assistant manager MacLeod says the Parkhead power-brokers need to get it done as McGregor closes in on his 250th appearance.
He knows that Brendan Rodgers has made it clear he would love to take the midfielder to Leicester City and there are other suitors in England.
MacLeod believes boosting McGregor’s package would encourage the player to stay at Celtic Park for the long haul.
“The club need to give him good money in a good contract and that will give him a massive boost as well,” he said. “I will be delighted if someone of Callum’s calibre is going to be rewarded because he totally deserves it.
“The way football is now players are coming to Celtic for two or three years – sometimes less – then moving to England to make money.
“Callum has been so loyal to Celtic. He’s been there since he was a kid. I don’t think he will want to play anywhere else, really. He loves it at Celtic and he has been at the heart of all of their recent success.
“But I think he needs to be shown that the club appreciate him and appreciate what he has done and what he will bring in the future.”
McGregor is preparing with the rest of the squad for Thursday’s Europa League clash with Lazio – and it will be in Rome’s Olympic Stadium on 7 November that he is due to hit the quarter century.
Back in the 1980s key players left Celtic because the club were not willing to pay the big bucks to keep them.
In the summer of 1987 MacLeod headed for Germany with Borussia Dortmund, Mo Johnston joined French side Nantes while Brian McClair and Alan McInally moved to Manchester United and Aston Villa respectively.
The former Scotland international added: “I know money is completely different now, but the principles were the same back in my day.
“A few of us were out of contract at the end of the 1986/87 season and I think most of the boys wanted to stay but the finances weren’t there.”
“I think it’s important that Celtic have good Scottish players in their side and Callum is clearly one of the best.”