Both nations are still in the hunt for automatic qualification for France next summer but could end up squaring off in a shootout for third spot as Poland and Germany currently fill the top two places in Group D.
And Gallacher believes any loser at the Aviva Stadium this weekend will be playing catch-up as far as qualification is concerned.
“It’s such a big game for both nations and I feel both will think they have to win it to get that third place and a play-off spot,” said Gallacher, who won 53 caps for Scotland between 1988 and 2001.
“A draw is not a bad result for Scotland because they would still be fighting it out. The next game after Ireland is against Georgia in September and to get three points from both those two matches would put Scotland in a very strong position.
“These two games could put Scotland top of the group and that would be a fantastic achievement going into the Germany and Poland games.
“Manager Gordon Strachan has created a buzz in the country during this qualifying campaign and a win on Saturday would set them apart from Ireland for that top-three finish.”
Shaun Maloney’s stunning strike after a well worked corner settled the first meeting between the two sides at Celtic Park last November.
It was a breathless contest and Gallacher says he expects a similar affair in Dublin this weekend.
“It’s like a club derby when form goes out of the window,” said Gallacher, who was speaking at the Ball Street Studios filming of the Vauxhall Home Nations Football Show.
“It’s so close and because the two managers know the players of the other side so well it makes it even tighter. I wouldn’t be surprised if a set-piece decided the game just like it did in Glasgow.”
Scotland warmed up for the crucial qualifier with a 1-0 victory over Qatar at Easter Road last Friday and Gallacher feels that run-out was essential for the players.
“They had not played for a few weeks and the fitness levels would have been a concern before the Ireland game,” Gallacher said.
“I had it myself before the 1998 World Cup in France, I had two weeks off at the end of the season before I joined up and then there was two weeks before the first game.
“You have a month off without playing you’re almost doing a mini pre-season. I know players are more professional these days and are able to prepare for games better, but it’s still difficult when you haven’t played much football for a few weeks.
“So it was good to have the Qatar game and for Scotland to carry on their winning ways.”