Van Gaal writes off Bayern title hopes
"We must now try and reach our minimum aim for the season which is second place," the Dutchman told reporters ahead of their home league match on Saturday against Kaiserslautern.
Bayern are fifth in the Bundesliga on 30 points with Dortmund top on 46 with 15 wins after 18 games.
"Anything above second place would be fantastic. Champions League qualification should not be put at risk," added van Gaal, who won the domestic double and took the team to the Champions League final last season in his first in charge.
Club CEO Karl-Heinz Rummenigge said Bayern's target for the season was the automatic Champions League qualification that comes with second spot.
Bayern have been blighted by injuries this season and also have the league's second worst percentage of converted chances.
"We train very well, we play very well but this does not show in the way we convert our chances," said van Gaal.