Gallacher junior produced seven second-round birdies for a 65 to leave him with a ten under par total of 132 and a share of the lead with Denmark's Thomas Bjørn, the 2011 champion at the Crans-sur-Sierre course in Switzerland's canton of Valais.
Scotland's Gallacher could have gone into Saturday's third round holding the outright lead but for a bogey at the 18th.
The frontrunners are being chased one shot back by a five-strong group including Spanish veteran Miguel Angel Jimenez, who set the course record of 61 on his way to winning here in 2010.
One shot further back came first-round leader Anirban Lahiri, and Paul Casey, while three-time major winner Padraig Harrington's 65 fired him into contention at seven under.
Gallacher has been struggling recently with a back injury and will take some time off after this week but it did not hamper him too much in the Swiss mountains.
"That was a solid round again today," he told europeantour.com.
"I hit the ball really well on the front nine and got my just rewards for the putts and I'm still in there for tomorrow (Saturday)."
And, in an interview with British Sky Sports television, he had positive news about his 64-year-old uncle Bernard, who has been in critical condition in hospital in Aberdeen since suffering a heart attack on August 30th.
"He was pretty good yesterday (Thursday) . . . he's eating and drinking by himself," Gallacher said.
There's still a long way to go, but he's due to come out of intensive care" he said.
"It's been a tough time for the family, hopefully he's past the worst."