The 27-year-old, who is currently second in the world rankings behind Jason Day, has four Major titles to his name during his career to date.
Nicklaus, the sport's most prolific winner of all time, believes that McIlroy - due to get married to fiance Erica Stoll in April - has the potential to replicate his own success if he keeps alive the desire to succeed.
"Rory is one of those young men who has got a tremendous amount of talent," he told BBC Sport. "He has won and played on his talent to this point. If he wishes to dominate and go forward then he's got to improve.
"He has to work hard, he's got to focus on what he is trying to do and it is up to him. Certainly he has all the tools to be able to do it - it is just whether he has the desire and the willingness to give up some other things.
"And that's his call. I mean, whatever Rory does, he has established himself as one of the great players that has ever played the game. Whether he wants to be the greatest player to have played the game, that's his determination and it's his decision whether he wants to make that effort to try to do that."
McIlroy has won two US PGA Championships, as well as the 2011 US Open and 2014 Open.