In a scrappy game Palace looked the more likely to score until the 21-year-old midfielder, recalled by Brian Laws after being dropped for six games, struck with substitute Leon Clarke adding a second in added time.
Palace, who halted a disastrous run of four straight defeats with a 3-1 win against Plymouth in midweek had almost snatched an early lead, John Oster's corner reaching full-back Clint Hill who headed over from close range.
Wednesday, carved out a half chance, Francis Jeffers, in the starting line-up at the expense of Leon Clarke, picking out Michael Gray but the midfielder scuffed his shot from 12 yards.
McAllister had a close-range strike half blocked before the Sheffield side had a narrow escape after they failed to cut out another Oster corner.
Victor Moses connected from six yards, his header was blocked by Tommy Spurr, the ball rebounded to the Palace striker, hitting his knee and bouncing off the post.
Marcus Tudgay produced a firm long-range header from a Darren Potter corner but powered it over the top under pressure from Claude Davis.
Richard Hinds produced a last-ditch tackle to foil the dangerous Moses before Wednesday almost crumbled on 64 minutes, Oster's teasing free-kick punched away by Lee Grant under pressure from Moses.
Palace, who brought on ex-Wednesday striker Shefki Kuqi for Moses, were foiled by the woodwork in the 69th minute, Oster's free-kick from the right finding Hill whose diving header crashed against the upright.
McAllister struck in the 80th minute hammering in a low drive from 15 yards after substitute Clarke's header fell at the midfielder's feet with.
In injury time Clarke hit the target himself, sliding Jermaine Johnson's cross wide of the sprawling Julian Speroni in the second minute of time added on.