The community was first settled in 1853. The town was platted and papers to form the town were filed on September 6, 1889, naming the town after Judge Frank Allyn of Tacoma who was influential in the early development of Allyn. By 1890 Allyn had a post office, school, newspaper, sawmill, two saloons, a hotel and wharf.
From the 1870s to the 1920s, transportation needs for Allyn and other communities along Case Inlet were once served by a small flotilla of steamboats. The last steamboat run from Tacoma to Allyn occurred in 1924, but local service may have lasted longer.
The local community based monthly newspaper called the North Bay Review, services Allyn.