The Italy international is in full agreement with the club's decision to bring through younger players and is confident the Rossoneri can compete for third spot in Serie A
After selling a number of older players on big wages during the summer, the Rossoneri have embarked on a new philosophy of recruiting youngsters and bringing through players from the club's academy.
"For the sake of the project it is fundamental that Allegri remains as the helm of the team," he told La Gazzetta dello Sport.
"He is a coach who really teaches us and who has the right patience. Allegri has done well to adapt to the club's new policy. The young players are getting better and it is down to him.
"The club has made the right decision. Look at [M'Baye] Niang; he is a player to focus on now and going into the future. It is the only way possible now. The club no longer brings in the kind of players it did before."
Milan currently sit in seventh spot in Serie A ahead of their clash with Bologna on Sunday and Montolivo is confident there is enough quality for the club to compete for the sought-after third spot.
"The road is long, but, we are hoping for that third spot. In March we will be in the top five, you'll see," he added.
"I do not think that there is too little quality now. On the contrary, there is a lot. We have just not played to our potential enough.
"The problem is that we made many mistakes at the start of the season and now we have no more room for making them again. We cannot go wrong anymore."