McAllister was born in Murwillumbah, on the north coast of New South Wales. She attended the University of Queensland from 1992–1995, majoring in Politics and Government, and the University of Sydney, the latter of which from she graduated in 1996 with a Bachelor of Arts with First Class Honours, majoring in Political Economy, Politics and Government.
McAllister's first formal involvement with politics came in 1992, when she registered as a member of the Australian Labor Party. In 2003, she co-founded the Labor Environment Activist Network with Kristina Keneally, a future Premier of New South Wales.
McAllister is a member of the ALP State Conference (NSW) (1999–present) and the ALP Administrative Committee (NSW) (2000–present). She was previously a member or delegate of the ALP National Policy Committee on Foreign Affairs (1998–2000), the ALP National Policy Committee (2006–2007). She was also the Labor candidate for the seat of Richmond in the 2001 federal election.
On 25 November 2011, McAllister was elected as National President of the ALP, serving until the conclusion of her term at the 2015 Australian Labor Party National Conference, where she was replaced by Mark Butler.
In July 2014, Jenny McAllister was selected to run on the Labor senate ticket at the 2016 election in the number two position, replacing John Faulkner, and considered a winnable spot. However, on 6 February 2015, John Faulkner resigned from the Senate, creating a casual vacancy. On 6 May 2015, McAllister was elected by a joint sitting of the NSW Parliament to fill the vacancy.
McAllister lives in Redfern with her husband, John Graham—former assistant general secretary of the NSW branch of the Labor Party and member of the Legislative Council—and their two children.
Jenny McAllister has worked professionally in both the public and private sectors. Between 2006 and 2010, she served as the Director of Climate Change, Air and Noise Policy within the New South Wales Department of Environment, Climate Change and Water. She subsequently joined AECOM Australia Pty Ltd as Strategic Advisor Water and Climate (2010–2013), progressing to Technical Director – Infrastructure Advisory (2013–2014) and was Managing Director, Water and Urban Development (2014–2015) and a member of AECOM's ANZ executive when she resigned to join the Australian Senate.