Rovers host the Clarets at Ewood Park in what promises to be a feisty Premier League encounter, the sides having not met since two FA Cup games in 2005.
Allardyce will be hoping his team can bounce back from their 6-2 defeat at Arsenal, and admitted that the fans are relishing the game against their Lancashire rivals.
"Ever since Burnley got promoted the Burnley and Blackburn fans have been talking about when the fixture is going to come out, and of course it's come after seven or eight games," he said.
"Its early on, Burnley are in good form at the moment, particularly at home and it makes them difficult opponents by the fact that they've started well in the Premier League and also the ferociousness of this local derby.
"As players, managers and coaching staff here at Blackburn we are all aware for the fans' point of view what it means.
"We just have to try and go out and give our very best on the day. Basically from my point of view it's saying to the players you've got to handle the atmosphere."
With precious league points at stake on Sunday, Allardyce is keen for his players not to get carried away by the occasion, and he wants a repeat performance of the win against Aston Villa last month.
"It's going to be a big game," he added. "The place is a sell-out, the atmosphere's going to be electric, let's respond to that in the right way.
"Let's not get involved in any antics whatsoever and let's play like we did against Aston Villa.
"If we do that then we're going to create chances to win the game and if we take them that's great, but basically put that performance together that we did against Aston Villa.
"That was a big, big win for us - we won with 10 men, with 25 minutes to go so that performance again will hopefully see us through on Sunday."