The Whites were chasing Gallagher on loan, but have been beaten to his signature by Patrick Vieira’s Crystal Palace.
Marcelo Bielsa’s Leeds gave Gallagher an impressive presentation as they looked to convince him to make the move to Elland Road.
He was a key midfield target for the Yorkshire club and they are now expected to turn to other options.
And the Whites found out that they had lost out on Gallagher on Thursday.
Leeds are still tipped to be looking for a midfielder to sign and it remains to be seen who they move for after missing out on Gallagher.
They have been linked with a host of potential targets, including Huddersfield Town’s Lewis O’Brien.
The Whites have added left-back Junior Firpo to the ranks this summer, snapping up the Spaniard from Barcelona.