The Blues have held talks with Atletico over a potential £30million move for the forward as they look to add to Enzo Maresca's attacking options.
Chelsea informed Gallagher that it was best for the academy product to move on, with the midfielder set to sign a five-year contract with Atletico.
Gallagher had been open to staying at Chelsea but wanted a longer-term deal than the offer he received of a two year deal with an option of another year.
The Blues have held talks over a £30m move for Omorodion, who was on loan at Alaves
Omorodion is part of Spain's squad at the Olympics and found the net against Egypt in the group stages.
Omorodion joined Atletico in August 2023 as he signed a five-year contract.
He was subsequently sent on loan to Granada, for whom he scored eight goals in 34 LaLiga games.
The prospect has also scored twice in seven appearances for Spain at Under-21 level.