Lloris took a heavy blow to the head in a collision with Everton striker Romelu Lukaku late in the second half of the clubs' goalless Barclays Premier League encounter at Goodison Park.
The Frenchman required lengthy treatment after the 78th-minute incident - which heavily contributed to the nine minutes of injury time added on - and looked set to be replaced by Brad Friedel.
But after finally being led off the field, he insisted he was fit to continue and Villas-Boas decided against making a substitution. Lloris went on to make a good late save from Gerard Deulofeu but questions were still asked as to whether it was safe for the 26-year-old to play on.
"Hugo still doesn't recall everything about the incident," Villas-Boas said. "I made the call to keep him on the pitch because of the signs he was giving.
"He was determined to continue and looked concentrated, driven and focused enough for me not to make the call to replace him.
"The saves he did after the incident proved that right."
Brain charity Headway have already dubbed Villas-Boas "irresponsible and cavalier".
A spokesman said: "When a player - or any individual - suffers a blow to the head that is severe enough for them to lose consciousness, it is vital they urgently seek appropriate medical attention.
"A physio or doctor treating a player on the pitch simply cannot accurately gauge the severity of the damage caused to the player's brain in such a setting as there may be delayed presentation of symptoms.
"By continuing to play, the player may have caused greater damage to his brain. He should have been removed from the game immediately and taken to hospital for thorough tests and observation."