This season he has made 13 competitive appearances for Ulster, scoring two tries against Glasgow Warriors and Cardiff Blues..
Commenting on his new deal, Allen said: "Signing a senior contract with Ulster has been an ambition of mine ever since I joined the Academy, so I am delighted to have fulfilled that goal.
"I have enjoyed being part of the set-up and playing so many games this season. Ulster is my home province, it's where I grew up and it's where my friends and family live, so it means a great deal to wear the shirt.
"I look forward to helping Ulster be successful over the next two years."