Blackburn host Burnley on October 18 in the first-ever Premier League meeting between the two sides.
Gallagher, who joined Leicester after eight years at Ewood Park in the summer, played in the last derby when Blackburn emerged triumphant from an FA Cup tie in 2005, but admitted that the Clarets would have the right to claim superiority in the region with victory a week on Sunday.
"Of course this game is bigger than the FA Cup game. I was lucky enough to have played in both those games and the atmosphere was something I haven't experienced before or since," Gallagher told the Lancashire Telegraph.
"But at the time, Blackburn were still the big team in the area as they have been pretty much all my lifetime. Now I suppose that reputation is at stake.
"Burnley are now in the Premier League and, credit to them, they have started very well. Whoever wins this game will believe they can say they are the better team."