Allegory defines a kind of story wherein figures or objects or characters from the story signify figures/objects/characters outside the story. We can look at this as a mode of writing that uses a whole story symbolically. For instance, in the movie, The Wizard of Oz, the lion represents cowardice, the scarecrow stands for the agrarian past and the tin man the technological future. While, An allusion is a figure of speech that makes a reference to some outside source: people, events, literary works, mythology. For example if someone said, "Well, he's no man of steel..." That would be an allusion to Superman.
