Leicester City 1 Ipswich Town 1
Lee Bowyer put the visitors ahead early on after Kasper Schmeichel had saved Michael Chopra's first-minute penalty.
But Gallagher equalised from the spot with twenty minutes remaining after Jason Scotland was adjudged to have handled the ball inside the area.
Matt Mills should have won it for the Foxes in the dying minutes, but his header from six yards flew well wide of the mark.
The result extended Leicester's winless streak to four games, having won just two out of seven since the return of Nigel Pearson.
The home side got off to the worst possible start when Paul Konchesky conceded a penalty inside the first minute for a foul on Lee Martin.
Michael Chopra stepped up to take the spot kick, but Kasper Schmeichel was equal to it, excellently tipping the ball around the post.
Ipswich did take the lead just minutes later when Lee Bowyer's hanging ball into the penalty area was poorly dealt with by the Leicester defence, and it was Bowyer himself who was on hand to smash the ball past Schmeichel from six yards.
The goal was a soft one to concede, and uncharacteristic of a usually stingy defence under Nigel Pearson.
Ipswich could have been a man down shortly afterwards when last-man Ibrahima Sonko fouled Jermaine Beckford who was bearing down on goal, but referee Darren Drysdale only displayed a yellow card.
Paul Gallagher struck wide from the ensuing free-kick, before Jason Scotland tested Kasper Schmeichel with a long range strike after Sol Bamba was caught in possession.
Matt Mills did well to block Lee Martin's shot following an Ipswich counter attack, while Sol Bamba's mazy run forced Ipswich goalkeeper Aaran Lee-Barrett into a near post save at the other end.
The second-half saw Andy King replace Lloyd Dyer in midfield, but the game never failed to spark into life until Paul Konchesky's low cross found David Nugent, but Aaran Lee-Barrett kept the ball out with his legs.
The game fell back into a lull before the Foxes were awarded a spot kick half-way through the second half when Jason Scotland was penalised for handball.
Paul Gallagher stepped up to slam the ball past Lee-Barrett from twelve yards - his second consecutive goal at the King Power Stadium and seventh of the season.
The equaliser briefly sparked Leicester into life, as Yuki Abe's low shot was fumbled and eventually saved by Lee-Barrett in the Ipswich goal.
The hosts had a glorious chance to secure all three points in the dying minutes of the match when Paul Gallagher's corner kick picked out an unmarked Matt Mills inside the six yard box, but the Leicester skipper fired his header well wide of the mark.
The final whistle maintained Leicester's unbeaten run at home since the return of Nigel Pearson, but the Foxes have now taken just nine points from seven games in their quest for promotion this season.
Man of the Match - Yuki Abe