The prolific hitman has netted a staggering 49 goals in two seasons for City after failing to fire at either Aberdeen or Inverness.
That striking form had brought him to the attention of Lennon, who tabled his interest at the end of May.
But, with Ross County having submitted a written bid for the free agent's services, Hibs and Aberdeen preparing to do the same and English League One attention also expected to materialise early next week, Lennon has had enough.
The Saints boss said: "We made our interest in the player clear to his representatives with an offer over a month ago and the plain fact of the matter is that we have had no verbal communication from them since mid-May.
"We were at a stage, with pre-season starting today, that we withdrew the offer and, as such, our interest ended and the offer was withdrawn.
"It is a pity as we view Rory as a player of real potential and I believe that St Mirren would have given him the ideal platform to showcase his talents at the top level. Now we move on and our attention is on other players."
McAllister said: "I want to go full-time. I'd like the opportunity to do that, but I know I've got to earn the right to play."
Lennon has already proved himself a shrewd judge of lower-league talent. Last summer he took former Cowden-beath stopper Darren McGregor with him to Greenhill Road, with the versatile defender becoming the SPL's outstanding home-grown rookie and the club's player of the year by a distance.