Allen's critical and commercial breakthrough came when she portrayed Marion Ravenwood opposite Harrison Ford in Raiders of the Lost Ark (1981), for which she won the Saturn Award for Best Actress.

[6] After she graduated from DuVal High School, in Lanham, Maryland, at 17, she moved to New York City to study art and design at Fashion Institute of Technology for two years.

[7] Allen later ran a boutique on the University of Maryland campus[8] and spent time traveling through South and Central Asia.

Allen's career-changing role came with the blockbuster movie Raiders of the Lost Ark (1981), directed by Steven Spielberg, in which she played Marion Ravenwood, the love interest of Indiana Jones (Harrison Ford).

[11] After a few minor films, including leading roles in the dramatic thriller Split Image (1982),[10] directed by Ted Kotcheff, and the Paris-set romantic drama Until September (1984), directed by Richard Marquand, as well as other stage appearances, she co-starred with Jeff Bridges in John Carpenter's science-fiction film Starman (1984).

[12] She often took breaks from movie roles to concentrate on stage acting; Allen appeared as Laura in the Paul Newman–directed film version of the Tennessee Williams play The Glass Menagerie, with John Malkovich and Joanne Woodward, in 1987.

[13] In 1988, Allen returned to the big screen as Bill Murray's long-lost love, Claire, in the Christmas comedy Scrooged.

[10] In 2014 she played the role of Betty Lowe in "Unfinished Business",[10] the 13th episode of the 4th season of the CBS police procedural drama Blue Bloods.

[14][15] Allen starred in the American premiere of Jon Fosse's A Summer Day at the Cherry Lane Theater in New York City, which opened in October 2012.

In August 2015, Allen directed Terrence McNally's Frankie and Johnny in the Clair de Lune for the Berkshire Theater Group.

[19] Allen played the lead role in 2017's Year by the Sea, a film based on The New York Times bestselling memoir by Joan Anderson.

[24] Following the birth of her son, Allen accepted smaller roles in TV and films to concentrate on raising Nicholas.