Abstract. We extend the unsupervised morpheme segmentation method Morfessor Baseline to account for the linguistic phenomenon of allomorphy, where one morpheme has several different surface forms. Our method discovers common base forms for allomorphs from an unannotated corpus. We evaluate the method by participating in the Morpho Challenge 2008 competition 1, where inferred analyses are compared against a linguistic gold standard. While our competition entry achieves high precision, but low recall, and therefore low F-measure scores, we show that a small model change gives state-of-the-art results.