The club and had made an inquiry to Schalke via email on Monday. Raúl, Real Madrid's record scorer with 323 goals in 741 appearances, joined Schalke in 2010 and is entering the final season of a £100,000-a-week contract.
The German club were open to sanctioning his sale but the 34-year-old has indicated he has no intention of moving to Blackburn.
The general manager of Schalke, Horst Heldt, had been demanding a "prompt decision" on the matter and held talks with the player and his representative on Tuesday night, seeking clarification on his intentions. But, though Raúl's relationship with the coach, Ralf Rangnick, has become strained over recent months, he has pledged his immediate future to Schalke and is expected to travel to Finland with the squad on Wednesday for Thursday's Europa League qualifying tie against HJK Helsinki.
"His agent has told me that Raúl wants to stay with Schalke 04 and asked us to reject Blackburn Rovers. We have already done so," Heldt said. "We are pleased that Raúl wants to continue to contribute to all our sporting success."
The rejection leaves Venky's seeking both a major signing to turn heads and forward reinforcements. The manager Steve Kean has signed David Goodwillie from Dundee United for £2.8m but is desperate to add to his strike force, having lost Nikola Kalinic, Benjani Mwaruwari and Mame Biram Diouf, who has gone back to Manchester United after his loan spell.
The club made a disappointing start to the Premier League season, losing 2-1 at home to Wolverhampton Wanderers.
Blackburn's owner would certainly have appreciated Raúl's profile having apparently attempted to secure David Beckham on loan from LA Galaxy in January.
Rovers were also linked heavily with a move for Milan's Brazilian forward Ronaldinho in the midwinter transfer window, before opting instead to secure Rubén Rochina and Mauro Formica from Barcelona B and Newell's Old Boys.
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