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When Rangers announced on 4 May 2018 that Steven Gerrard would be appointed as the club's new manager, it was also confirmed that McAllister would become his assistant.

McAllister was appointed first team coach at Liverpool in July 2015. He left the position on 8 October 2015 after the sacking of Brendan Rodgers, but was appointed to an ambassadorial position at the club.

Liverpool's first trophy of the season came in the Football League Cup Final. After replacing Steven Gerrard as a 78th minute substitute, McAllister scored the team's opening penalty kick in a 5–4 shootout win over Birmingham City. He again came on as a substitute in the FA Cup Final, as Liverpool came from behind to win 2–1 against Arsenal. Four days later, he was named in the starting line-up in the UEFA Cup Final against Alavés. McAllister scored one, and had a hand in three, of the five Liverpool goals in a memorable 5–4 victory. In the 117th minute, McAllister's free-kick was deflected by Alaves' Delfi Geli into his own net for the winning golden goal. He was awarded the man of the match award for his efforts, with BBC pundit and former Liverpool defender Alan Hansen stating, "Gary McAllister was outstanding. At 36, to keep going the way he did, keep taking those free-kicks and producing it when it counted, was sensational. He fully deserved his man of the match award."

On 20 May 2010, he was appointed as Middlesbrough first-team coach, where he teamed up again with Gordon Strachan. He made a return to the field to take part in Jamie Carragher's testimonial match.

On 18 September 2010, it was announced on the official Aston Villa website that McAllister had accepted an offer from Gérard Houllier to become the next assistant manager at Villa Park; McAllister had previously played under Houllier when the Frenchman was in charge of Liverpool. After Houllier was rushed to hospital in April 2011, McAllister was made caretaker manager for a Premier League game against Stoke City, which ended in a 1–1 draw. After he led Aston Villa to a 2–1 away win against Arsenal and a 1–0 home win over Liverpool, McAllister continued as caretaker for the remainder of the 2010–11 season. With Houllier having to step down to due ill health, it was announced on 17 June 2011 that after the appointment of Alex McLeish as manager that McAllister would not return to the club as part of the new coaching team.

On 22 September 2009, it was revealed that McAllister was in talks with Scotland about replacing Steven Pressley as Scotland's third coach; however, on 25 September 2009, it was revealed that he rejected the opportunity as he was holding out for a job at club level. On 29 September 2009, it was reported that he would become Portsmouth assistant manager, but he couldn't agree a deal with the club.

After almost four years out of the game, McAllister was appointed manager of another of his former clubs as a player, Leeds United, on 29 January 2008 with an initial contract until the end of the season. The club was sitting in sixth place after former boss Dennis Wise's surprise departure to Newcastle. McAllister's first game came four days after his appointment, a 1–0 away defeat to Southend United. Leeds lost their next game 2–0 to Tranmere Rovers and slipped to eighth. The new manager bagged his first win at the fifth attempt, in a 1–0 away victory over Swindon Town, before following it up with his first home victory against Bournemouth, in which Leeds beat the relegation-threatened side 2–0.

Leeds chairman Ken Bates rewarded McAllister for his hard work and the team's good form – just two defeats in 12 games – by offering him a new 12-month rolling contract on 3 April 2008. Bates cited McAllister's general improvement of team performances and his planning for the club's future as reasons for offering him the new contract. Leeds secured a spot in the play-offs with a 1–0 at Yeovil Town on 25 April 2008, but they lost 1–0 to Doncaster Rovers in the play-off final. During his second season as manager, McAllister was sacked on 21 December 2008 after a poor string of results; these included an FA Cup defeat to part-time club Histon and culminated with a 3–1 loss to MK Dons.

McAllister left Liverpool in May 2002 to take up the role of player-manager at Coventry City, replacing his former teammate Roland Nilsson in the job. He resigned on 12 January 2004. McAllister's former assistant, Eric Black, replaced him three days later. He selected himself in 60 matches and scored 12 goals before retiring as a player.

He was appointed player-manager of Coventry City in April 2002. He resigned from this position in January 2004 and did not enter management again until he returned to Elland Road in January 2008, to replace Dennis Wise as manager. McAllister guided Leeds to the promotion playoffs, but was dismissed in December 2008. In April 2011, while working as assistant to manager Gérard Houllier at Aston Villa, he became caretaker manager at the Premier League club for a few months due to Houllier's ill health. He also had coaching roles at Middlesbrough and Liverpool, returning to Scotland with Rangers in 2018.

McAllister began the following season by scoring a penalty in Liverpool's 2–1 win over Manchester United in the Charity Shield. He started the club's opening Champions League fixture, a 1–1 draw with Boavista at Anfield. McAllister left Anfield on 13 May 2002 to take up the role of player-manager of Coventry City. He ended his Liverpool career with a substitute appearance in a 5–0 win over Ipswich Town. At Liverpool for two years he featured 87 times and scored nine goals. McAllister was named as number 32 in the 100 Players Who Shook The Kop survey.

McAllister also represented his national side for nine years, winning 57 caps and scoring five goals. His leadership qualities were noticed, and he spent four years as Scotland captain in addition to two seasons as Leeds United captain. He was awarded an MBE in the 2001 New Year Honours in recognition of his contribution to football and was inducted to the Scottish Football Hall of Fame in 2016.

Aged 35, on 1 July 2000, McAllister moved to Liverpool in a Bosman transfer. Though serving for a relatively short time at Anfield, he played an integral role in the team that won a treble of cups in the 2000–01 season. Houllier described McAllister as his "most inspirational signing".

On 31 March 1999, McAllister returned to the Scotland team, captaining the side in a UEFA Euro 2000 qualification game against the Czech Republic. McAllister was booed by a section of Celtic Park crowd and announced his retirement from international football soon after. Despite later attempts by manager Craig Brown to convince McAllister to return, the playmaker did not add to his 57 caps.

McAllister earned his 50th cap in a 1998 FIFA World Cup qualifier with Sweden. The team ultimately qualified for the tournament, finishing second to Austria. McAllister scored an important penalty kick in a match away to Belarus in qualifying, but he missed the finals through injury.

In Strachan's first full season as manager in 1997–98, McAllister played alongside George Boateng in midfield behind Darren Huckerby and Dion Dublin in attack finishing 11th and reaching the FA Cup quarter-finals in 1998. His final Coventry season they had a poor start including defeat by Tranmere Rovers in the League Cup and finished 15th in the league. The line-up included the likes of Robbie Keane, Mustapha Hadji, Carlton Palmer, Mo Konjić and Youssef Chippo.

Aged 31, McAllister left Leeds for Coventry City on 26 July 1996, for a fee of £3million. His move to the Midlands club came less than a year after he had scored a hat-trick against them for Leeds. He stayed there for four seasons and played firstly under Ron Atkinson and then former Leeds teammate Gordon Strachan. The side including Noel Whelan, John Salako and Darren Huckerby were in a relegation battle. Atkinson went upstairs to become 'Director of Football' in late 1996 in order to make way for Strachan. Strachan's team continued to struggle until a late season recovery. With McAllister captaining the side, the Sky Blues secured an away draw against Arsenal and wins against Chelsea, Liverpool (away) and Tottenham Hotspur (away) to secure salvation.

Scotland failed to qualify for the 1994 FIFA World Cup but did qualify for UEFA Euro 1996 in England, with McAllister the captain of the team. Scotland's second match of the group stage was against England at Wembley Stadium. In the second half Scotland, trailing 0–1 to an Alan Shearer goal, were awarded a penalty. McAllister's kick was saved by David Seaman and Scotland lost 0–2. The team won their next match against Switzerland but were eliminated on goals scored.

In the rest of McAllister's time at Leeds the highest the club finished during this period was fifth in the 1993–94 and 1994–95 seasons and the lowest was 17th in the 1992–93 Premier League – one of the lowest-placed finishes of a defending league champion in English football history. He captained the side for two seasons. During the 1992–93 season, McAllister made his debut in the UEFA Champions League. He scored in matches against VfB Stuttgart and Rangers, but Leeds were knocked out by the latter in a match hyped as the Battle of Britain. In final season finished 13th. He captained the team at Wembley Stadium in the 1996 League Cup Final, where they were beaten 3–0 by Aston Villa.

McAllister played primarily as a midfielder in a career spanning over nineteen years. He started his career at local side Motherwell before moving south of the border to Leicester City at the age of 20. He then went on to play for Leeds United, where he won the English league championship in 1991–92. McAllister later had spells at Premier League sides Coventry City, where he was credited with his role in helping the club avoid relegation repeatedly, and Liverpool, where he won a cup 'treble' in 2000–01 at the age of 36.

McAllister arrived at Leeds United on 2 July 1990 for a tribunal-determined fee of £1,000,000, and replaced the role vacated by Vinnie Jones when he left for Sheffield United. The club had just achieved promotion to Division One, the top tier of English football at the time. Leeds in McAllister's first season at Elland Road finished fourth in the table and reaching the League Cup semi-finals. He formed a midfield quartet that season with fellow Scottish international Gordon Strachan and relative youngsters David Batty and Gary Speed. In 1991–92 season Leeds United were crowned League Champions.

In October 1990, McAllister scored his first goal for Scotland in a UEFA Euro 1992 qualifier against Switzerland. He appeared in all three of Scotland's group stage matches at the tournament, scoring in a 3–0 win over the CIS. However, Scotland did not qualify from their group.

Over the following three seasons his reputation quickly grew into being one of the best players in the Second Division, boosted by a respectable goal tally from midfield that included an uncommon number of well-executed strikes from unfavourable positions. He was named in the Second Division PFA Team of the Year in both 1988–89 and 1989–90 and was the subject of constant transfer speculation and interest by several First Division sides throughout the following term. He turned down a heavily mooted £1.15 million move to Nottingham Forest to see out his contract with Leicester after Brian Clough apparently failed to impress him during an interview.

After scoring the equaliser on his debut for Scotland B against France in April 1987, McAllister debuted for Scotland in a friendly against East Germany in the buildup to the 1990 FIFA World Cup. Though he was included in the squad for the tournament, he did not make an appearance as Scotland were eliminated in the first round.

McAllister's performances in the cup caught the eye of Leicester City manager Gordon Milne. He signed for the English club, along with Motherwell teammate Ally Mauchlen, for a combined fee of £350,000 in August 1985. Although Mauchlen's greater experience cast McAllister as the 'make-weight' in the deal, he soon rose to prominence as an attacking force in Leicester midfield, impressing manager and fans alike with his accurate passing to feet, and confident range of skills on the ball. During his first season at Filbert Street he adapted well to regular First Division football, and began to rise to prominence in creating chances for a team that included Steve Lynex and Alan Smith.

McAllister began his playing career at his local side Motherwell; he stated he supported the club as a child, but also had an affection for Manchester United as his family were acquainted with that of Matt Busby. His senior debut was away to Queen of the South on 1 May 1982. McAllister scored eight goals in 70 appearances, culminating in a fine performance in the 1985 Scottish Cup semi-final against Celtic. With Motherwell he was more often a striker than a midfielder.

Gary McAllister, MBE (born 25 December 1964) is a Scottish professional football coach and former player, who is the assistant manager of Rangers.