Allison grew up in a racing family and, like his brother Bobby, began his career driving modified stock cars before graduating to the NASCAR Grand National Series. He earned the NASCAR Grand National Rookie of the Year award in 1967, announcing himself as a legitimate contender at the sport's highest level. The Allison family's collective racing legacy made them one of the most prominent dynasties in American stock car history.
Allison recorded ten wins in NASCAR Cup Series competition. His first victory came at the 1968 Carolina 500 at Rockingham Speedway, and his final win was at the 1978 Dixie 500 at Atlanta Motor Speedway. He ran competitive equipment for much of his career and was regarded as a skilled and aggressive racer.
A serious injury sustained at the 1981 Coca-Cola 600 effectively ended his full-time NASCAR career. He made only fourteen more Winston Cup starts between 1982 and 1988, also failing to qualify on four occasions during that stretch.
Allison also competed in the USAC Championship Car Series. At the 1970 Indianapolis 500, driving the No. 83 Eagle 67-Offenhauser for Ansted-Thompson Racing, he finished fourth and won the 1970 Indianapolis 500 Rookie of the Year Award. Because he was using a NASCAR license at the time, he was ineligible for USAC championship points. He returned to Indianapolis in 1971, driving the No. 84 Purolator Filters Coyote-Ford V8 and finishing sixth.
Allison is perhaps best remembered for an incident on the final lap of the 1979 Daytona 500, a race broadcast live flag-to-flag on national television for the first time in NASCAR history. Running in the lead with Cale Yarborough drafting closely behind, Yarborough attempted to go below Allison for the inside line. Contact between the cars sent both drivers into the infield grass and ultimately into the outside wall in turn three. With their cars locked together in the infield, a heated argument broke out between Allison and Yarborough. Bobby Allison, who had fallen laps down, pulled over to check on his brother; Yarborough accused Bobby of interference and a physical confrontation followed.
Richard Petty, running more than half a lap behind at the time of the crash, inherited the win. The dramatic finish and the post-race fight made headlines across the country and are widely credited with accelerating NASCAR's rise in national popularity during the 1980s.
Allison was inducted into the International Motorsports Hall of Fame in 2009 and into the NASCAR Hall of Fame in 2024. He also received inductions into the Alabama Sports Hall of Fame, the Florida Sports Hall of Fame, the Stock Car Racing Hall of Fame, the Alabama Auto Racing Pioneers, the Motorsports Hall of Fame of America, and the National Motorsports Press Association Hall of Fame.
After retiring from competition, Allison worked as a television and radio commentator and became a consultant to upcoming drivers through his family's Allison Legacy Race Series, mentoring talents including Joey Logano, Trevor Bayne, and Regan Smith.