It was not immediately known which player or players would be going back to Milwaukee in the trade.
Gallardo, 28, is 89-64 with a 3.69 ERA in parts of eight seasons with Milwaukee. He'll make $13 million this season in the final year of a multiyear contract and will be eligible for free agency in November. Rangers general manager Jon Daniels has said previously that the club is interested in signing players entering the final year of their contracts.
Gallardo played high school baseball in Fort Worth, Texas. One source told ESPN that if a trade occurs, Gallardo is amenable to signing a long-term deal to stay with the Rangers before he hits the open market.
The Rangers came into the offseason looking for quality starting pitching, particularly someone who could pitch a lot of innings. Gallardo has gone at least 200 innings twice in his career.
Foxsports.com earlier reported the Rangers are closing in on a deal for Gallardo.
ESPN.com's Calvin Watkins contributed to this report.