He is believed to have been born in London, England, about 1585 or 1586 and was raised to become a tailor. A religious non-conformist, he apparently followed the Scrooby exiles to Leiden, Holland as a young man. There he married his first wife, Mary Norris, in November 1611.
Accompanying Isaac and Mary on the Mayflower were their three children: Bartholemew, Remember, and Mary, and a servant boy named John Hooke. Allerton's wife and Hooke died in the first winter at the Plymouth Colony. Allerton also had a stillborn son by his wife Mary while they were on the ship in Plymouth Harbor. Allerton remarried to Fear Brewster, the daughter of William Brewster in 1626. With her he had another son naming him Isaac Allerton Jr.
Allerton quickly rose to prominence among the Pilgrim leaders, serving as William Bradford's assistant governor during the early years of the colony. After the adoption of a more formalized governmental structure in 1624, he served again as one of five assistant governors. In 1627, he became one of the eight "undertakers" of the colony's debt and made several voyages to London to negotiate with the colony's creditors.
Bradford wrote: "Mr. Allerton played his own game and ran a course not only to the great wrong and determent of the Plantation... but abused them in England also in prejudice against the Plantation," and later on he wrote "Concerning Mr. Allerton's accounts. They were so large and intricate as they could not well understand them, much less examine and correct them without a great deal of time and help and his own presence, which was hard to get," and also "he screwed up his poor father in law's account".
Settling in Marblehead, Massachusetts, Allerton established a profitable fishing business. Fear Brewster died in 1634, and Allerton married Joanna Swinnerton sometime between 1634 and 1644. He was soon commanded by the Massachusetts authorities to leave the colony. He relocated to New Amsterdam in 1643, where he was a member of the Council of eight men. Two years later, he moved again to the new English settlement at New Haven, Connecticut, where he continued his activities as a merchant.
Allerton died in February 1659 in New Haven and was buried under the town common. Although his estate, when inventoried, appeared to be large, he was in fact found to have died insolvent.
His daughter, Mary, was the last survivor of the Mayflower company.