McDermott insists Wolves' offer - believed to be in the region of £3 million - is below the Royals valuation of Mills which is around £4 million. Stoke and Leicester are also understood to be interested in the Reading skipper.
McDermott told the Reading Chronicle: "We've had an offer from Wolves (for Mills) which was turned down. It was way off our valuation. I don't know if they will come back for more. They may do but I don't want to encourage clubs to bid for our players."
McDermott is keen to retain the services of 24-year-old Mills.
Wolves boss Mick McCarthy has made strengthening his defence a priority after his side leaked too many soft goals last season.
Other names on his radar include Richard Dunne, Roger Johnson, Jonny Evans, Matthew Upson and Sebastien Bassong.
Source: PA
Source: PA