In distributed software development, planning and managing fair and transparent task allocation is both critical and challenging. The objective of this paper is to propose a decentralized blockchain-oriented, transparent task allocation framework to improve the quality of the task allocation process. It addresses the concerns of (i) enhancing collaboration, (ii) inhibiting knowledge vaporization, and (iii) reducing documentation problems. The proposed method is a novel two-fold process: First, it identifies and categorizes tasks exhibiting different dependencies and complexities to create equal task clusters based on their dependency type, difficulty, cost, and time. Second, it uses a blockchain-oriented framework to broadcast, check bid validity, allow developers to bid on tasks matching their roles and expertise, evaluate, and announce the winner for task allocation using smart contracts. Results of experimentation, surveys, and interviews with software practitioners conclude that the proposed solution is transparent and effective in allocating tasks (with Cranach’s alpha of 0.894) at a low cost of contract execution in a distributed software development environment. Overall, the proposed approach will have a positive and significant impact in industrial settings.