The Bathgate professional needed just 24 putts to finish a stroke behind South African Richard Sterne.
The highlight of Gallacher's round came at the par-4 sixth, where he holed a 165-yard 7-iron for an eagle 2 and, after dropping shots at 10 and 11, the Scot again turned up the heat with a birdie at 12 before rolling in a 10-foot eagle putt at the 13th.
Gallacher appeared to be very much at ease on the putting surfaces despite a number of the Emirates Course greens having been affected by fungus in the tournament run-up.
"I came out here over Christmas and the greens were long and sandy but, like any other course, they always seem to get them in brilliant condition," he said. "There's a few problem areas but you don't even see them. As far as I'm concerned, they look brilliant and, besides, you can't shoot 10 under and nine under on bad greens."
It is the fifth time Gallacher has shot a 63, while his Dubai effort is his lowest score in 45 rounds of the Emirates layout. Last year he won a Mercedes for a hole in one, then drove his way to a share of second and a best finish in six years.
But, with a promising first round in the bag, the 38-year-old is hoping he can win for the first time since his 2004 Alfred Dunhill Links victory at St Andrews.
The Glaswegian pair of Scott Jamieson and Chris Doak trail Gallacher by two shots, with Jamieson starting his round with an eagle before adding six birdies, and just one bogey.
Jamieson had only 25 putts, and matched the 65 he had to start the event a year ago.
"I mentioned earlier in the week that compared to the other two courses here in the Middle East, this Dubai course suits me the best," he said. "But then seven-under-par on any golf course is always a good score. The conditions were just perfect this morning and the course was very much for the taking."
Doak made a mockery of his 250th world ranking, not dropping a shot in his first appearance in the event. It is the first time this year the 35-year-old has broken 70.
Colin Montgomerie shot a 69 after missing the cut in the two earlier Middle East Swing tournaments.
n Scot David James earned a place on the European Senior Tour by winning the qualifying school final at the Pestana resort in Portugal.
James, the former Southerness amateur who reached the final of the Scottish Amateur Championship and the semi-finals of the British Championship in 1985, closed with a three-under 68 for a 10-under 274.
James finished two shots clear of Englishman Simon Brown, with the top six players all gaining full exemptions for the over-50s circuit.
DUBAI DESERT CLASSIC Scot equals personal best with a 63, writes Bernie McGuire