Flamboyant Allison, known as "Big Mal" and remembered off the pitch for his trademark cigar and fedora, died earlier this month at the age of 83.
He enjoyed a long and colourful career as a football player, coach and manager, and is best remembered for his time at City.
The cortege stopped briefly at the City of Manchester stadium before his funeral service at Manchester Crematorium.
Around 300 people had gathered to pay their respects and round of applause greeted the arrival of the cars.
A sky-blue Manchester City scarf was draped over Allison's coffin and next to it was an ice bucket containing a bottle of Moet et Chandon champagne.
Stephen O'Neill, 51, from Gatley, near Stockport, said: "Big Mal was a Manchester City legend.
"He was an innovative coach who brought us great success.
"Some of the coaching techniques you see in football today, Malcolm Allison was doing all those years ago."
Working alongside Joe Mercer, Allison helped transform City into one of the most exciting sides in the country. They won the league title in 1968, the FA Cup in 1969, and in 1970 the League Cup and European Cup Winners' Cup.
Source: PA
Source: PA