Honda held talks with Milan during the summer with less than six months to run his CSKA Moscow contract, which expires in the first week of 2014.
Allegri has revealed that Honda will join French international Adil Rami in signing for the Rossoneri when the transfer window opens, as Milan look to bounce back from a patchy start to the campaign.
He told reporters following this afternoon's defeat at Parma: "Adil Rami and Keisuke Honda will be joining us in January and strengthen our squad.
"We are not balanced yet, as we go from great focus in the Champions League to distractions in Serie A.
"We need to improve a great deal away from home, as we've only picked up two points this season on our travels."