“There is a four-horse race here that is ever so tight,” McCulloch told Sky Sports.
“Celtic have a game in hand where they could create a little gap but it is really, really exciting for Scottish football."
Rangers beat Celtic in December to go level on points with their Old Firm rivals but defeat on Wednesday has left them three points behind Celtic who beat St. Mirren 4-0.
As well as Kilmarnock, Aberdeen are in the race to win the title according to McCulloch, they have moved level with the Gers on 42 points after 22 games played.
Lee McCulloch played for both Rangers and Kilmarnock (Image: GETTY)
Although Celtic have the advantage, McCulloch is confident his former side will have a change in fortunes when their new signings gel.
McCulloch said: ”I think that is the most difficult thing [being match fit] for Jermain Defoe and Steven Davis and getting them match and performance minutes.
"The Scottish Cup game against Cowdenbeath was called off and they had a friendly here at Ibrox where I think they both played for a half but it's not really enough if you haven't played this season.
"I think it will still take two, three, four games to get match sharpness but I think Jermain Defoe does what Jermain Defoe does and that's put the ball into the back of the net.”
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Jermain Defoe scored his first Rangers goal on Wednesday (Image: GETTY)
I thought Steven Davis was great but I still think that match sharpness can come back
Lee McCulloch
Despite the defeat, Davies started to show his talent in midfield against Kilmarnock and Defoe scored the opening goal, giving fans reason to be cheerful.
"The ball fell to him [on Wednesday] and it just went into the back of the net - that is a positive for him,” McCulloch said.
"I thought Steven Davis was great but I still think that match sharpness can come back and can increase the team's chances."