The announcement was made in the Queen's New Year Honours list.
McAllister said he was "thrilled" to learn of the news. "Whilst it is a huge personal honour for me it is also, I hope, a recognition of how much the railway has improved and of the extraordinary dedication and commitment of the railwaymen and women of Britain," he added.
Sir Ian McAllister CBE was born in 1943 and graduated from London University, where he gained a BSc in Economics in 1964.
He was appointed chairman of Network Rail in October 2002 following the acquisition of Railtrack plc. He was previously the chairman and managing director of Ford Britain, having joined the company in August 1964.
In addition to being chairman of Network Rail, Sir Ian is chairman of the Carbon Trust. He is also a non-executive director of Scottish and Newcastle plc, director of the Energy Savings Trust and director of UCL Business.