Allen has decided the time was right to leave for "family reasons and in order to explore other options," according to a statement released on the Rangers website.
Allen was responsible for bringing Steven Gerrard to Rangers and oversaw a summer transfer window which saw Ryan Kent return for £7m on the final day.
Allen said: “It has been a privilege to work for Rangers, one of the biggest clubs in football with such a phenomenal fan base, and I’ve loved every minute.
"Bringing Steven Gerrard to the club will always be a special point in my career and I would like to thank him, his excellent staff, the players and all the staff at Rangers for their support throughout my tenure.
"My greatest wish is for Rangers to start winning trophies again and I wish them all the very best for the future”
Rangers Managing Director Stewart Robertson believed it was a 'blow' to lose the former Manchester City academy head.
He said: “On behalf of the Board, I would like to thank Mark for his work in recent seasons.
"We are disappointed to lose him but we appreciate the impact he made during his time in Scotland and he leaves Rangers in a better place than when he first arrived.
"Losing a man of his calibre is a blow but the practices he put in place at the club will stand us in good stead for the future. We wish Mark well in his future career.”