She told E! Online: "I think it's great. It's just wonderful. I love her. Maybe we should do something together."
The 'Nine 'til Five' star then joked that she could name herself after a chocolate snack popular in her native southern America to sound similar to Gaga's own unusual self-styled moniker.
She quipped: "GooGoo and Gaga! You know those GooGoo candy bars in Nashville? I could be Lady GooGoo."
Although more advanced in years, Dolly is similar to the 25-year-old 'Poker Face' singer because both are proud of their eccentricities and are seemingly unconcerned with what others think of them.
The 65-year-old music legend said: "I really do think that I stand for being proud of who you are and not worrying a lick about what other people think, really. I feel fortunate that I've never had to be anything other than myself."
One star Dolly has already teamed up with is Queen Latifah.
The two star as opposing choir members in new musical movie 'Joyful Noise’ and they sing together on two tracks.
Dolly said: "I wrote four of the numbers. There are a couple we got to do together. There's a lot of great music in the movie".