Allen, who joins the Ospreys from Pontypool, can play at number eight or blindside flanker. Standing 1.89 metres tall and weighing in at 111kg, Allen has been capped by Wales at Under-18 and Under-20, making a big impression in the recent Six Nations tournament where he took the man of the match award for the final game, a 30-22 win over Italy.
Born in Newport, Allen is currently studying at the city's university, where he is in the first year of a sports coaching and development degree.
Speaking after completing the move, Allen said: "This is a fantastic opportunity for me to develop my game and look to build a long rugby career. When you look at the development structure in place at the Ospreys, you have to say that they are the Welsh region that seems to have everything in place, they are constantly churning out decent players for the region and for Wales, so it's obviously a good place to be as a youngster. I've got a three year contract which will allow me time to hopefully make my mark.
"When you look at the quality of back row players currently at the Ospreys it's incredible really. I can only learn in that kind of environment, working with players like Ryan Jones, Jerry Collins, Filo Tiatia and Tom Smith who cover my positions, they are all players who have achieved a hell of a lot and I'm looking forward to being part of the squad."
Ospreys Elite Performance Director, Andrew Hore, said the signing of Allen was further evidence of the region's commitment to developing young Welsh talent:
"Our talent ID and recognition network is tailored to identify up and coming talent that we feel has the potential to make a big impact in professional rugby. We aren't talking about big name players, we are talking about players who display the right characteristics, physical and mental, that we believe can help someone become a true Osprey.
"Morgan is a prime example of that. He has done well for Pontypool in the Premiership this season, as well as on the international stage, and we believe that by bringing him into a professional environment we can give him the tools to really flourish. Having another young back-row player coming through will ultimately benefit both the Ospreys and Welsh rugby."