Aslef, which represents most of ScotRail's 1,200 drivers, said it had rejected a final 2.5% pay rise offer from management.
The union is unhappy at productivity improvements linked to the offer, such as the use of driver-only trains.
The ScotRail Alliance said it felt its offer was "fair".
Aslef's Scottish district secretary, Kevin Lindsay, said: "We have rejected ScotRail's final offer and a report will be sent to the Aslef executive committee recommending rejection of the offer and a call for industrial action if ScotRail fail to reopen the talks and make a satisfactory offer.
"We want the company to come back to the table and make an offer which is acceptable to ourselves and more importantly the drivers."
It is understood that industrial action could take place as early as the end of August, if no agreement is reached.
A spokeswoman for the ScotRail Alliance, which includes Network Rail, said: "During our latest round of discussions we made what we felt was a fair offer that would see drivers receive an above inflation pay rise and a bonus payment for working Sundays.
"We think it important that, as part of this deal, we work together with the unions to find ways to make sure that our working practices deliver more for our customers.
"We are, of course, more than happy to continue discussions."
Earlier this week, the threat of a UK national rail strike was averted after Network Rail agreed a two-year pay deal with unions.
The deal included a 2% pay rise this year and a pay increase in line with RPI inflation next year.
ScotRail train drivers are set to vote on possible industrial action after pay talks broke down between management and unions.