Chappell, a former Australia captain and one of the country's best ever batsmen, is embroiled in a power struggle with Indian captain Sourav Ganguly after an email he wrote criticising the Indian captain became public.
"Greg Chappell's a fantastic individual skills and batting coach, but he was a poor coach when it came to looking after a group of people," Wilson told the Australian news agency AAP on Tuesday.
Wilson, who played one Test for Australia in 1998 against India as well as 11 one-day internationals, said in five seasons in South Australia the team's best results were two fourth-placings in the national state competition.
"When he was with SA a lot of guys fell by the wayside, Greg didn't seem to worry himself with a lot of the guys and they really didn't feel led," Wilson said.
"It's only now under (coach) Wayne Phillips that the lost ground is being recovered."
Wilson, a fast bowler who left South Australia to play for Western Australia in the 2002-2003 season, retired from cricket in 2004.
Wilson, who also worked as a marketing and development officer for South Australian cricket during Chappell's time with the organisation, said Chappell did not nurture talent.
"No real batting talent came through and I don't think he looked hard enough within his own squad or within the state for the players that could have improved," Wilson said.
"His opinion seemed to form pretty quickly that this group is not responding so we'll have to look elsewhere, so they searched for interstate players and by and large they failed."
Wilson said Chappell's Indian appointment came as a surprise to many of the players he had coached.
"I hope he does a reasonable job for the sake of Indian cricket, and in this battle with Ganguly he may actually be in the right, but there wouldn't be too many guys who played under him in SA who'd be disappointed to see he's not going all that well over there," he said.