Situated near St Mary's Church, the Allied Arms has roots going back to the 16th Century, when St Mary's Butts (formerly Old Street) was one of Reading's main streets. The pub is one of the last remaining buildings depicted on Speed's Map of Reading, dated 1610.

The Allied Arms is located in what was the area of Saxon Reading, and is almost certainly part of the original land on which the first church in Reading was built in the early 7th Century. The church was later replaced by a nunnery founded by Queen Elfrida sometime after 978, in atonement for the murder of her stepson King Alfred and the succession of her own son, Elthered the Unready, to the throne.

The Church of St Mary's as we see it today was built around 1200 and extensively modified in 1551 using materials from the dissolved Abbey. Stone found in the garden of the Allied Arms matches exactly with stone imported from Caen by Henry I to build Reading Abbey.

The earliest images of the Allied Arms, that we can find, were made around some time in the late 19th century, when the business was run by Jerome & Sons and known as The Allied Arms Brewery. The brewery was founded in 1828, and has sold beer from that day on