The Pies drafted Allan, the son of Hawthorn premiership player Ben Allan, in 2022 with pick no.19 out of Claremont.
The versatile utility managed just five games with the Colts last season due to injury, averaging 25 disposals. Originally signing a two-year deal when drafted, Allan is now set to be a Pie until at least the end of 2026.
Graham Wright, Collingwood's General Manager of Football, said Allan had plenty of potential but that the Pies were playing it safe with their first-round pick.
“Ed's ball winning ability, speed and endurance, combined with his size makes him an exciting prospect for our future,” Wright said.
“Ed had some injury issues in 2022 and while he's completed most of the pre-season, we will ensure we take our time with him and manage his development.
“He is a high quality young man and we're wrapped to extend his contract by a further two years.”