The Blues' League Two rivals today landed the Newcastle winger on a half-season loan deal.
Gilliead's move confirmed the News & Star 's story earlier today that the Kenilworth Road club were making a move for the 20-year-old.
It is a blow to United boss Keith Curle, who has long been keen on bringing Gilliead back to Brunton Park for a second spell.
But the Blues manager has several other targets and is hoping to do some business before tonight's 11pm deadline.
Luton boss Nathan Jones has long been an admirer of Gilliead, who was not involved in the Magpies' Under-23 side this week ahead of his move to Bedfordshire in a deal until January 7.
On the Hatters' website Jones said: “Alex ticks every box for us. He’s young, hungry and wants to do well. He’s technically very good, he’s fit and he fits in nicely with our group.
“It’s a real coup for the club, the fact that he wants to come here, we are excited to have him.
“He ticks all the boxes we look for and we are delighted that Newcastle have entrusted us to continue his development.”
Gilliead said his memory of playing for Carlisle against Luton - when he scored in a dramatic 4-3 comeback win for the Blues last season - meant he was tempted by the Hatters.
He said: “I remember there was a cracking atmosphere and the fans got right behind their team even though we [Carlisle] won the game in the end.
“I love the old-fashioned stadium and the noise was incredible. I remember thinking at the time ‘It’d be good to have this on my side’, so when the chance arose to come here on loan, it didn’t need much consideration."
Gilliead could face Carlisle when Curle's side go to Kenilworth Road on December 10.
Curle, meanwhile, was coy on his chances of making other signings before the 11pm cut-off, but hinted a "domino effect" at other clubs could benefit the Blues.
Curle has previously said he would like to add competition at full-back, on the wings and up front.
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