The former premier will not contest her seat of Bendigo East at the Victorian election in November, she told a press conference in her hometown on Friday.
Her resignation had been widely expected since she stepped down as premier in July after a delegation of MPs told her she had lost the support of the Labor caucus, elevating her deputy Ben Carroll.
Ms Allan said much had changed since she first won election in 1999, becoming the youngest Victorian female MP at just 25, but she would leave the same way she entered.
"A daughter of Bendigo. A daughter of workers. A proud Labor woman," Ms Allan said.
Ms Allan leaves behind a strong polling record in her home city, but also a seat that will now be tested without Victorian Labor's most recognisable figure.
Monash political scientist Zareh Ghazarian said Bendigo East remained a strong Labor seat, with Ms Allan retaining it by 10.8 per cent against Liberal candidate Darin Schade in 2022.
But the November poll is an open battle, following a major local swing against Labor at the 2025 federal election, a strong Nationals candidate and an unknown quantity in One Nation.
Local publican Andrew Lethlean, who secured the swing against Labor at the federal poll, has thrown his hat in the ring as the Nationals' state candidate for Bendigo East.
The federal result would give the Nationals confidence but federal and state voting patterns could be very different, Dr Ghazarian said.
"I think that's going to be a bit of a challenge to translate that support he (Mr Lethlean) got at the federal election to a state election," he said.
Mr Lethlean accused Ms Allan of running a "city-centric" government but said her resignation would not change his priorities ahead of the election.
"My main focus was on the region and on Bendigo and the rural areas," he said.
Ms Allan's departure provides an opportunity to argue Labor has moved beyond the previous era, Dr Ghazarian said.
The Labor candidate, who is yet to be announced, could take inspiration from Mr Carroll's efforts to draw a line under his administration.
Mr Carroll used his first speech as premier to announce, "I am not Daniel Andrews. I am not Jacinta Allan".
On Friday, he praised Ms Allan's commitment to regional Victoria and, most notably, her home electorate.
"Jacinta's service has always been grounded in a simple belief: that people in regional Victoria deserve the same opportunities as those in our biggest cities," Mr Carroll said in a statement.
Ms Allan leaves with a record that includes building major projects, strengthening anti-hate laws, signing a treaty with Aboriginal Victorians, and overhauling planning laws to promote construction of housing.
Her political legacy is complicated by overseeing Victorian Labor's Big Build program as transport infrastructure minister from 2018 to 2023.
Widespread corruption allegations within Victoria's construction sector, including on government worksites, have been aired in a Queensland inquiry and media reporting.
Mr Carroll was quick to announce a royal commission but is yet to publicly announce the terms of reference.
Ms Allan's premiership was also complicated by the collapse of the Commonwealth Games and concerns about debt and economic management and crime.
Those issues would form part of the eventual historical assessment of Ms Allan's career, but so too would her longevity, repeated endorsements from Bendigo voters and her rise through the ranks, Dr Ghazarian said.
"It is a political career that many politicians would aspire to," he said.
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