After serving in state and federal elected positions, he was appointed as the first United States-appointed civilian governor of Puerto Rico when the U.S. acquired it after the Spanish–American War.

[5] He worked with his father in their company,[4] Otis Allen and Son, a lumber business that manufactured wooden boxes and sold railroad ties, housing frames, and road building materials.

[5] In 1898 President William McKinley named Allen as Assistant Secretary of the Navy when Theodore Roosevelt resigned the post to enter the Spanish–American War.

[5] When the war ended, President McKinley appointed Allen as the first civilian governor of Puerto Rico, and he served from 1900 to 1901.

[4] Though Allen had a business background, his financial administration of Puerto Rico has been criticized by historians Thomas Aitken Jr. and Manuel Maldonado-Denis.

During Allen's tenure this annual budget equaled the 4.4 million pesos the Spanish had spent in 1897, but without expenses for a five-thousand man garrison or the former contributions to the Catholic church.

[6] Due to this reduced overhead, the island should have had a substantial budget surplus, but Allen's administration did not provide many benefits for the people.

He ignored the appropriation requests of the Puerto Rican House of Delegates, and refused to make any municipal, agricultural or small business loans.

Instead of making needed infrastructure and education investments, Allen re-directed the insular budget to no-bid contracts for U.S. businessmen, railroad subsidies for U.S.-owned sugar plantations, and high salaries for U.S. bureaucrats in the island government.

[9] While Allen built the largest sugar syndicate in the world, his political appointees in Puerto Rico provided him with land grants, tax subsidies, water rights, railroad easements, foreclosure sales and favorable tariffs.