A goal from Danny Cummins eight minutes from the end sealed a 1-11 to 0-8 win for Galway in a wet and windy Pearse Stadium on Saturday.
Derry were in a strong position when they trailed by just 0-8 to 0-5 at the break after playing against the strong wind, and they cut the gap to a point seven minutes after the restart.
But Derry fell away after that and did not score again until stoppage as Galway took over and Cummins sealed it when he finished a good passing movement to the net.
Afterwards, Derry manager Brian McIver (above) announced he was stepping down after three years in charge.
Derry raced into a three-point lead after nine minutes, through Eoin Bradley, Benny Heron and Daniel Heavron.
But once Fiontan O Curraoin and Tom Flynn got on top in midfield, helped by a strong half-back line of Liam Silke, Gary O'Donnell and Gareth Bradshaw, Galway took control.
They made the most of Derry's constant fouling and Gary Sice, with five, and a couple from Paul Conroy saw the Tribesmen hit seven frees in a row.
Derry also lost Brendan Rogers to a harsh black card but they were given a boost before the break when Heavron and Heron pointed.
Derry trimmed the lead to just a point within seven minutes of the restart with efforts from Heavron and Cailean O'Boyle but did not score again until stoppage time despite having the wind at their backs.
Sice pointed for Galway and then set up O'Donnell to put four between the sides ten minutes from the end.
They sealed the issue seven minutes from the end when a flowing move ended with Cummins' eventh championship goal.
SfC qualifiers