The 20-year-old is rated as one of the most exciting young talents in Welsh rugby and will make his full debut for Wales against Argentina this Saturday at the Millennium Stadium.
The Cardiff-born centre made his Blues debut against Newcastle Falcons in the LV=Cup in October 2011 at the age of eighteen.
Allen, who has represented Wales at Under-18s, Under-20s and Sevens, has since made a total of ten appearances for Blues. He scored his first try for the region this season away at Leinster.
Allen said: "I'm a Cardiff boy and love playing my rugby here so I'm pleased to be able to sign a new three-year deal and commit my future to the Blues.
"I've enjoyed being part of the first team set- up this season and trying to take every opportunity that I have been given.
"This season has got better and better for me. From getting my first start against Edinburgh to beating Toulon and now my involvement with Wales. It's been surreal how quickly everything has happened but you have to take your chances when they come.
"I'm still very young and know I have a lot to learn. But Phil (Davies) and the coaching team at Blues have backed me and I know this is the best environment for me to get better and keep improving my game.
"I genuinely feel it is an exciting time to be involved with Blues. Our backline is very young and I have grown up with many of the lads. The longer we play together the better we will get and we all want to be competing for silverware in the future."
Allen will make his full Wales debut on Saturday against Argentina and admitted he was relishing his chance to play on the biggest stage.
"I can't wait," he said. "It's every young boys dream to pull on the red jersey and play at the Millennium Stadium. All I can picture is singing the anthem and what it will mean and feel like.
"I was there last week for the South Africa game and I was pretty nervous then just watching. But it's all about taking opportunities and I want to take mine.
"It's been great to be part of the Wales set-up these last few weeks and I know all my team-mates will be supporting and backing me come kick-off against Argentina. It will be a special day."