The 25-year-old midfielder was omitted from the Ibrox club's Europa League squad.
The former Livingston and Middlesbrough player will join Gabala's training camp in Salzburg, with a view to a temporary switch.
Halliday, who joined Rangers in 2015 and made 42 appearances last season, is under contract until 2020.
However, he started only two of the 11 games overseen by manager Pedro Caixinha following his appointment in March.
Gabala finished second in the Azerbaijan Premier League last season and begin their Europa League campaign against the winners of the tie involving Georgia's Dinamo Batumi and Jagiellonia Bialystok of Poland next month.
Gabala reached the group stage of the competition in the 2015-16 campaign.
Rangers' Andy Halliday is on his way to Austria to complete a season-long loan to Azerbaijani side Gabala.