Despite Barnsley's relegation from the Championship, the 28-year-old enjoyed an excellent campaign with 15 goals for the Tykes.
Charlton were quick to make their move at the end of the season and they agreed a fee with Barnsley.
However, following talks between O'Grady and Charlton, the deal has hit the buffers after the two parties failed to agree personal. terms.
It remains to be seen whether Charlton will make an improved offer to the striker.