Gallacher was transferred to Derby County in November 1934 for £2,750. He was taken under the wing of fellow Scotsmen Dally Duncan and an old Newcastle United friend, Jimmy Boyd, and was said to have been as good as gold during his Baseball Ground days. His 38 goals in 51 league games helped Derby finish second in the league to Sunderland in 1935–36, a finish the club have surpassed only twice (both times in the 1970s under the influence of Brian Clough and Dave Mackay). Gallacher hit 40 goals in his 55 games for Derby.