The local economy is predominantly based on agriculture (notably sheep farming) and tourism, although of late it has become a popular commuter town for Newcastle upon Tyne.

The significant growth of Allendale Town and the surrounding villages was fuelled by that of the local lead-mining and smelting industries in the 19th century.

The remains of two flues from the former smelting mill (between Allendale and Catton) run to chimneys up on the fells high above the village.

With the closure of the lead mines, the population rapidly declined and Allendale became a popular tourist destination for Edwardian Tynesiders seeking a country escape.

The railway was finally closed to passengers in 1930 and to goods in 1950, when the local terminus was bought by the stationmaster and opened as a caravan park.

[7] Popularly held to be the town or dale that is referenced in Charles Jefferys' and Sidney Nelson's 1835 ballad The Rose of Allandale Rose of Allendale, published in the New York Mirror, and later sung by Paddy Reilly, The Dubliners and many others, it seems more likely that this song is either metaphorical or refers literally to the community on Allan Water in the Scottish Highlands at the beginning of the Firth of Forth.

The town's New Year celebrations involve lighted tar barrels that are carried on the heads of revellers called guisers.

Until Brexit the residents of Allendale voted to elect MEPs for the North East England constituency of the European Parliament.

For local government purposes Allemdale is in the Tynedale Division for elections to Northumberland County Council, a unitary authority.

The village is served by Go North East's 688 bus service, which links Allenheads, Sinderhope and Allendale with Catton, Langley and Hexham.

[19] The nearest railway stations are located at Hexham and Haydon Bridge, both of which are on the Tyne Valley Line, which runs between Newcastle and Carlisle.

[28] Allendale is featured as a key location in Stewart Pringle's 2024 play The Bounds, which premiered at Live Theatre, Newcastle before transferring to the Royal Court, London.