Israel striker Tomer Hemed has rejected a contract offer from Rangers, with the 24-year-old choosing instead to join Spanish club Real Mallorca.
Hemed was one of Rangers manager Ally McCoist's primary transfer targets as he seeks to bolster his squad.
But, while Hemed was attracted by the prospect of working under McCoist, the lure of playing against Barcelona and Real Madrid was too strong.
Hemed, a recent Israel debutant, was out of contract with Maccabi Haifa.
His agent, Max Meltzer, told BBC Scotland: "Rangers are a fantastic club and Tomer knows that so it was a very difficult decision for him.
"However, in the end, he decided to pursue the opportunity presented to him from Spain."
McCoist, who met Hemed's representatives on Tuesday along with Rangers owner Craig Whyte, must now turn his attention to other targets.
Hemed was top scorer for the Israeli champions last season, with 17 goals, and made his international debut this month against Latvia, providing an assist for Yossi Benayoun in a 2-1 victory.
Clubs in Italy, Spain and Belgium were also tracking the player, who is understood to have spoken to Celtic's Beram Kayal, a former Maccabi team-mate, about a possible move to Glasgow.
However, Hemed has instead agreed a three-year deal to join the side that finished 17th in La Liga last season.
McCoist confirmed earlier this week that the Scottish champions are also "very keen" to sign Crystal Palace midfielder Neil Danns.
In a statement on Rangers' website, McCoist said that they hoped to win the race for Danns' signature, despite interest from a number of other clubs.
"As regards Neil, our head of football administration, Andrew Dickson, has spoken to his representative and we are keen, very keen," he said.
"That's one we are pursuing further as well. He's a player we are keen on."
Rangers have also previously confirmed their interest in out-of-contract Dundee United and Scotland winger Craig Conway, who is also attracting the attention of English Championship clubs.