The redshirt sophomore was voted MVP as the team finished 10-4 with a bowl win.
Florida native Allen had 1,037 all purpose yards and 15 touchdowns last year including four 100-yard games.
In the Las Vegas Bowl victory over Fresno State, he ran for 83 yards and two touchdowns.
Allen had previously shown interest in the draft.
Allen said today that;"I never was leaving. I get my degree in a year …. It’s just something I thought about and looked into for next year.”
High profile backs such as Tre Mason, Jeremy Hill and Ka'Deem Carey have already declared for the draft which would have meant a low drafting position had Allen declared.
USC linebacker Hayes Pollard said Monday that he would also return to Pasadena for his final year of NCAA eligibility.
However, receiver Marquise Lee and Allen's backfield teammate Silas Redd have declared for the draft along with four other players.
The deadline for players to declare is tomorrow.