Superb 62 helps Gallacher gallop into the lead.
As well as shooting a score one shot off Ernie Els's 1994 course record of 61, Gallacher's superb round helped him achieve the event's best ever score after 54 holes of 195, beating Tiger Woods' 2001 three-round record by a stroke.
An unblemished round of four birdies on the front nine and another two, plus two eagles, on the back nine, jettisoned the flying Scotsman to the top of the leaderboard.
On Friday, he had been tied for second, but in the third round he went one better despite wet and windy conditions at Emirates Golf Club's Majlis Course.
South Africa's Richard Sterne, the leader of the first two rounds, is now at 18-under par after lowering his score by six shots from day two with seven birdies and a bogey.
Meanwhile, Denmark's Thorbjorn Olesen sits third having reduced his mark to 16-under par, making up five shots with seven birdies and two bogeys.
Having only won once on the European Tour with the Dunhill Links Championship in 2004, despite having turned professional in 1995, Gallacher now has to overcome demons that have blighted his career.
He finished tied for second at this stage last year, a shot off the champion, Rafael Cabrera-Bello of Spain.
"It would be great to know you could do it again," said Gallacher, of his ever-elusive second European Tour win after nine years of waiting. "I've certainly been playing better the last three or four years.
"I've had a lot of close shaves, a couple of seconds last year, and a second the year before. It's just you come up against guys that sometimes it's just their day and you need a bit of luck. It's tough to win, but if you've done it before, you can do it again."
Speaking of his near miss last year, he said: "It wasn't a disappointing Sunday. I shot four-under in tough conditions and I had a putt for the tie.
"I had only had five seconds around here as well, so it's not easy to win, but the goal is to try and be in contention more times, and certainly I've got a good chance tomorrow.
On his impressive third round, Gallacher added: "It's the best round I've had. Four nine-under pars and a ten-under this week, but I was just trying to make as many birdies as I could."
Otherwise, second-placed Richard Sterne, who had dominated the first two rounds, believes he's better off handing a temporary lead to Gallacher.
Sterne said: "I'm a bit more comfortable perhaps not leading going into the last round as you can see from my history.
"I've given myself a chance going into tomorrow, and will be in the last group again which, will hopefully be a lot of fun and I can put some good scores on there and put some pressure on Stephen."
He added of Gallacher: "He's a good player and he's got quite a good record around here. I think he's always had a couple of top fives.
"It's going to take some doing [to stop him], but there are still some guys behind. And as Stephen showed today, a low score is out there so someone who is six, seven behind can still post a good one."
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