Michael's controversial new song, Shoot the Dog, satirises Prime Minister Tony Blair's relationship with US President George W Bush, depicting Mr Blair as a poodle in its cartoon video.
But Gallagher said Michael's attempt at social commentary was "laughable".
The song's author concealed his homosexuality until 1998 when he was caught propositioning a Los Angeles police officer in a public toilet.
"What's he trying to say?" said Gallagher.
"He's now trying to make social comment, this is the guy who hid who he actually was from the public for 20 years, now, all of a sudden, he's got something to say about the way of the world. I find it laughable.
"That's even before you get to the song, which is diabolical."
Oasis brothers Noel and Liam are known for their scathing attacks on other artists.
Noel Gallagher pronounced Kylie Minogue "a demonic little idiot", and Liam said Spice Girl Victoria Beckham was too stupid to write a book.
Other targets have included Robbie Williams and Damon Albarn.
Michael defended his song last week, saying he was definitely not anti-American, amid reports the song was causing controversy in the States.
"I am definitely not anti-American," he said. "How could I be? I have been in love with a Texan for six years."
Michael's partner Kenny Goss is from Texas.
The singer said there were no plans to release Shoot The Dog in the US.
"The record was never intended for American release, for the precise reason that I felt it could be misread in this very way," he said.
The single is set to go on sale in the UK on 5 August.
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