Recent advances in structural biology and computational techniques have revealed allosteric mechanisms for an abundance of targets leading to the establishment of rational design of allosteric modulators as a new avenue for drug discovery. Considering that allostery is an intrinsic property of the protein conformational ensemble, allosteric drug design has the potential to develop into an innovative approach to modulate the dysregulation of therapeutic targets that are considered to be undruggable at their orthosteric site, explore strategic design opportunities to tackle new chemical space, or develop mutant-specific therapies to target mutations occurring far from the enzyme active site. Traditionally, allosteric drug discovery has been performed through high-throughput screening or through serendipitous discoveries; however, recent developments in structure-based and ligand-based methods have led to exciting advancements of designing bioactive allosteric ligands rationally. In this review article, we highlight the advantages and disadvantages of allosteric modulators and present structure-based and ligand-based drug design methodologies for the identification of allosteric binding sites and allosteric modulators. We also illustrate representative studies for allosteric modulators design for proteins belonging to a wide range of protein families, also considering irreversible binding with covalent allosteric modulators. Additionally, we analyze challenges and successes in the rational design of allosteric inhibitors and activators. Finally, we present the future of rational allosteric ligand design with newly built computational tools that we expect to be applied in future studies, concluding to theoretical and practical guidelines for allosteric ligand design strategies and identify knowledge gaps that need to be addressed to improve efficiency in allosteric drug design.