Born Peter Allen Woolnough in Tenterfield, New South Wales, Allen began his performing career as one of the "Allen Brothers" who were a popular cabaret and television act in the early 1960s. Discovered by Judy Garland during an Australian tour, she invited him to return with her to the United States where he performed with her. He married her daughter Liza Minnelli in 1967. They were divorced in 1972.
Allen recorded his first album, the autobiographical Tenterfield Saddler (1972), but he achieved more success writing for other performers. He wrote "Don't Cry Out Loud" for Melissa Manchester, and scored his biggest success with the song "I Honestly Love You" recorded by Olivia Newton-John. Her single reached number one in the United States and won two Grammy Awards for Record of the Year and Best Female Pop Vocal Performance for Newton-John.
In 1977 Allen released an album Taught By Experts, which reached number one in Australia, along with the number one singles "I Go To Rio" and "The More I See You". Although his recording career in the US never progressed, he became a popular performer in Las Vegas and had a long engagement at New York City's Radio City Music Hall.
He co-wrote the song "Arthur's Theme" (sometimes also called "The Best That You Can Do") with Burt Bacharach, Carole Bayer Sager and Christopher Cross, for the movie Arthur (1980). Cross' version of the song reached number one in the US, and the songwriters won an Academy Award for Best Song.
He died in San Diego, California from complications caused by AIDS.
After his death, one of his older songs "I Still Call Australia Home", became popular through its use in television commercials for tourism, and came to be regarded as an unofficial Australian national anthem.
A musical based on his life, titled The Boy From Oz, opened in Australia in 1998. Using his largely autobiographical songs to form the soundtrack, the production starred Todd McKinney as Allen, and Christina Amphlett of rock group Divinyls as Garland. The show was an outstanding success. In 2003 it opened on Broadway, becoming the first Australian musical ever to be performed there. In this production Allen was played by Hugh Jackman who won a Tony Award for his portrayal in 2004.