Holtby is set to join Spurs when his contract expires in June, but with Brazilian midfielder Sandro out for the rest of the season with a knee injury, the north London side approached Schalke in a bid to sign him now.
Manager of the Bundesliga outfit, Horst Heldt, confirmed they had rejected the offer, saying: "Tottenham have made an offer, which was not acceptable, therefore it was rejected.
"The transfer window is still open and Lewis has not become any cheaper."
The Germany Under-21 captain produced another impressive performance for Heldt's side on Friday when he created two goals and scored the decisive fifth in Schalke's thrilling 5-4 home win over Hanover 96.
The 22-year-old later confirmed any potential move is out of his hands, and his eyes are firmly fixed on his future with Schalke.
He said: "I will give my all for Schalke until the last second. Everything else must be decided by the clubs."
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