The 39-year-old lost to four-times major winner Ernie Els at the 19th after being two up with three to play then missing a four-foot birdie putt to win at the last.
It left Gallacher, who’d hardly put a foot wrong until those final few holes against one of the game’s greatest match-play exponents, licking his wounds.
But he wasn’t alone on a day when three former world No 1s - Luke Donald, Lee Westwood and Martin Kaymer - also bowed out, as did Europe’s Ryder Cup talisman, Ian Poulter.
US Open champion Justin Rose, in fact, was the only one from five English starters to survive and, even then, he had a struggle in setting up a second-round clash with Els.
World No 6 Zach Johnson and 2011 USPGA champion Keegan Bradley were other big-name casualties.
But Henrik Stenson, top seed in the absence of Tiger Woods and Adam Scott, progressed, as did Rory McIlroy and Graeme McDowell, the latter recovering from three down with three to play before winning at the 19th.
Gallacher had outgunned both Woods and McIlroy to become the first player to retain the Dubai Desert Classic in the event’s 25-year history at the start of the month.
And, for the most part, he displayed the confidence gained from that to put himself in the driving seat against the infinitely more experienced Els.
Gallacher, who lost to Poulter in the first round on his debut in the event 12 months ago,wasted no time showing Els he’d be in for a fight by hitting his approach to short third just as close as the South African had and matching his birdie.
After exchanging the fourth and seventh, where Els hit it close from a fairway bunker, Gallacher then won two in a row - the ninth and tenth - to give himself a bit breathing space.
Els reduced the deficit with a 6 to his opponent’s 7 at the long 11th then let Gallacher off the hook by missing a short one to square matters at the 13th.
And, after getting down in two putts from a mile away for a half at the 14th, the Scot set up a hole-winning birdie at the next with a majestic chip from an awkward spot.
Els pulled one back again when Gallacher’s tee shot airmailed the 16th green and they were all square when a par proved good enough again for the seven-times Wentworth World Match Play champion at the penultimate hole.
It was advantage Gallacher after he hit a stunning second to around four feet at the last, where Els found a greenside bunker. But, after the South African splashed out to save his par, Gallacher’s putt agonisingly stayed out as it ran along the rim of the hole.
He then came up short with his approach at the first extra hole, where a par proved good enough to take a relieved Els into the last 32.
The top seed when he was dumped out by Shane Lowry in the first round 12 months ago, McIlroy survived day one this time but only after losing the opening hole to Boo Weekley.
“I played well for the first 12 holes but then got a little complacent and gave Boo a couple of holes,” said the Northern Irishman after completing a 3 and 2 success.
Four down after seven and still three down with three to play, compatriot McDowell looked down and out but, through a combination of his own good play and some nervy stuff from Gary Woodland, he progressed with a splendid birdie-3 at the 19th.
“I feel very fortunate to get through that match as he looked unbeatable and I thought my manager would have a plane ticket booked as it looked as though I was going home,” admitted McDowell, the Volvo Match Play champion.
“I’d been pummelled on the first nine and then, after throwing the kitchen sink at him, looked dead and buried until I got a little bit of luck from the Gods.”
Poulter, the 2010 and someone who relishes these head-to-head clashes, crashed out to American Rickie Fowler as he set up a second-round clash with countryman Jimmy Walker.
Fowler, who had missed three straight cuts coming in here as swing changes made with Butch Harmon bed in, was three up after seven then rolled in a 45-foot eagle putt at the 13th to restore that position.
And, though Poulter briefly raised hopes of staging a fightback as he holed from around 18 feet at the next, the Englishman had left himself with an insurmountable task on this occasion.
“It was always going to be a tough match and, though Poulter didn’t play that great today, he found a way to hang in there,” admitted Fowler. “It feels good to get a win against him and I’m excited about working with Butch.”
Walker, golf’s man of the moment after recording three wins on the 2014 PGA Tour schedule, is also coached by Harmon and he wasted no time in becoming the first player to progress. Always in the driving seat against South African Branden Grace, the 35-year-old late bloomer rolled in a 12-footer at the 14th to seal a 5 and 4 success.
“I was knocking on the door and felt it was a matter of time before I won,” said Walker of a sizzling run of form that has elevated him to 25th in the world and put him on course for a Ryder Cup debut at Gleneagles.
“He’s the sixth seed [in the Ben Hogan bracket] but is really No 1 seed,” noted Fowler of his next opponent. “He’s the best player in the world off three wins, so he is going to be tough to beat.”
Neither Donald or Westwood were that yesterday. Donald, the 2011 winner, crashed 5 and 4 to PGA champion Matteo Manassero while Westwood also succumbed tamely to Harris English, who played in the 2011 Walker Cup at Royal Aberdeen.
Matt Kuchar, the defending champion, thought he’d closed out a 5 and 4 win against Austrian Bernd Wiesberger and shook hands with his opponent only to realise he’d not replaced his marker to its original spot after moving it on the green.
“It was an interesting lesson learned,” admitted Kuchar after ‘winning’ the match for a second time two holes later. “I got so involved in watching the line of Bernd’s putt and thinking about my chance to win the match that I completely forgot to move it back - something that’s never happened to me before.
“As soon as the question was asked, I knew right away but I was fortunate to have a nice lead at the time. It’s one of those things, though hopefully it never happens to me again.”
Stenson, winner on a different Dove Mountain course seven years ago, chalked up his first success on this one as he accounted for Thailand’s Kiradech Aphibarnrat.
On a good day for the Swedes, Peter Hanson and Jonas Blixt also progressed with wins over Dustin Johnson and Bradley respectively.
Others to put a smile on the face of European Ryder Cup captain Paul McGinley included Victor Dubuisson, Thomas Bjorn and Sergio Garcia, three of the leading contenders for the Irishman’s team at Gleneagles in September.
But, at the end of the day, the Americans came out on top 11-5 in head-to-head matches with the Europeans.
FIRST ROUND RESULTS
Rickie Fowler (US) bt Ian Poulter (Eng) 2 and 1
Jimmy Walker (US) bt Branden Grace (SA) 5 and 4
Bubba Watson (US) bt Mikko Ilonen (Fin) 2 and 1
Jonas Blixt (Swe) bt Keegan Bradley (US) 2 and 1
George Coetzee (SA) bt Steve Stricker (US) 3 and 1
Patrick Reed (US) bt Graham DeLaet (Can) one hole
Jordan Spieth (US) bt Pablo Larrazabal (Sp) two holes
Thomas Bjorn (Den) bt Francesco Molinari (Ita) 2 and 1
Sergio Garcia (Sp) bt Marc Leishman (Aus) at 22nd
Bill Haas (US) bt Miguel Angel Jimenez (Sp) 4 and 3
Peter Hanson (Swe) bt Dustin Johnson (US) 4 and 3
Victor Dubuisson (Fra) bt Kevin Streelman (US) 5 and 4
Jason Day (Aus) bt Thorbjorn Olesen (Den) two holes
Billy Horschel (US) bt Jamie Donaldson (Wal) 6 and 5
Matt Kuchar (US) bt Bernd Wiesberger (Aust) 3 and 2
Ryan Moore (US) bt Joost Luiten (Neth) one hole
Charl Schwartzel (SA) bt Kevin Stadler (US) 3 and 2
Jim Furyk (US) bt Chris Kirk (US) 2 and 1
Graeme McDowell (NIre) bt Gary Woodland (US) at 19th
Hideki Matsuyama (Jpn) bt Martin Kaymer (Ger) 2 and 1
Brandt Snedeker (US) bt David Lynn (Eng) at 20th
Webb Simpson (US) bt Thongchai Jaidee (Thai) 3 and 2
Jason Dufner (US) bt Scott Stallings (US) at 19th
Matteo Manassero (It) bt Luke Donald (Eng) 5 and 4
Rory McIlroy (Nire) bt Boo Weekley (US) 3 and 2
Harrish English (US) bt Lee Westwood (Eng) 5 and 3
Richard Sterne (SA) bt Zach Johnson (US) 5 and 4
Hunter Mahan (US) bt Gonzalo Fenz-Castano (Sp) 3 and 2
Henrik Stenson (Swe) bt Kiradech Aphibanrat (Thai) 2 and 1
Louis Oosthuizen (SA) bt Nick Watney (US) one hole
Justin Rose (Eng) bt Scott Piercy (US) one hole
Ernie Els (SA) bt Stephen Gallacher (Sco) at 19th
TODAY’S SECOND-ROUND MATCHES
McIlroy v English
Schwartzel v Furyk
Garcia v Haas
Fowler v Walker
Blixt v Watson
Dubuisson v Hanson
Matsuyama v McDowell
Mahan v Sterne
Bjorn v Spieth
Moore v Kuchar
Manassero v Dufner
Reed v Coetzee
Horschel v Day
Snedeker v Simpson
Oosthuizen v Stenson
Rose v Els