He confirmed ahead of Monday's game against Atalanta that this will be his last season in charge of the Rossoneri.
Allegri, who joined Milan in the summer of 2010 from Cagliari, has endured a difficult campaign with the San Siro outfit.
Milan have won just four times in 17 Serie A games and begin 2014 in 13th place, 27 points behind league leaders Juventus.
"Of course this is my last Christmas at AC Milan," he told AC Milan.com. "I feel very fortunate to have had the chance to guide an important club like Milan.
"We are very bitter with our current position in the league standings and now we need to give our best in order to climb up in the table.
"There are still a lot of games left to play."
The Rossoneri are still alive in the Champions League, where they will face Atletico Madrid in the last 16 next month.
Also, the Rossoneri face Spezia in the last 16 of the Coppa Italia on January 15 and that looks to be their best chance to qualify for European competition next season.
In the meantime, Milan take on Atalanta looking to turn their fortunes around with Allegri's side having won just one of their last nine league games and heading into the game on the back of a 1-0 reverse at the hands of arch rivals Inter Milan.
Atalanta could leapfrog Milan in the standings as they are just two places and one point behind the Rossoneri going into the encounter.
Atalanta lost 4-1 to Juventus in the last round and have mustered just one win on the road this season, but Stefano Colantuono's men remain optimistic of earning a positive result come Monday.
"We have trained well during the winter break and we are ready for this match," said former Milan defender Mario Yepes.
"We will have to try to take advantage of the drop in concentration that Milan has during the match."
Milan are still without injured striker Stephan El Shaarawy and new signing Keisuke Honda is unlikely to be handed his Rossoneri debut against Atalanta having only just arrived in Milan. The Japan forward joined the club in the winter transfer market from CSKA Moscow.