The Scotland international loose-head joined the club in 2014 and has gone on to make 70 appearances for the club.
Allan, who has represented Scotland four times, joined Edinburgh Rugbys Academy system in 2012.
He has represented Scotland at age grade levels up to U20s and played for Scotland A in their game against England Saxons at Scotstoun in 2014.
The 25-year-old has enjoyed a run of games under Head Coach Dave Rennie, playing 19 times so far this season.
Meanwhile, it has been confirmed that loose-head prop Ryan Grant will be staying with Glasgow Warriors until the end of the season after re-joining the club on a short-term deal in September.
The 32-year-old has made 111 appearances for the club.
Speaking to Warriors TV, Alex said: "It was an easy decision to stay at Glasgow - it was a no-brainer.
"I've really enjoyed the three-and-a-half seasons I've been at the club and I'm looking forward to another season.
"I was 22 when I first joined and my game has improved massively. I've still got a lot of improvements to make and I feel this is the right environment for me to make those improvements."
Glasgow Warriors Assistant Coach Jonathan Humphreys said: "Alex (Allan) has played really well this season and he's great for our environment, so we're looking forward to going forward together.
"He's still young and we feel the best is still to come from Alex.
"He's a fantastic athlete and can add to the type of game we want to play, so we're delighted he's staying.
"Ryan (Grant) has been at the club a while now and is part of the culture. He's great with the young props and is scrummaging really well. I can't speak highly enough of him."