As "Alison" was recorded before Elvis Costello and the Attractions formed, his backing band on the track was Clover. Costello has divulged little on the meaning of the song other than to say that it is about "disappointing somebody" and to deny suggestions that the lines "somebody better put out the big light" and "my aim is true" refer to murder. He has also declined to reveal who the song is about, writing in the liner notes for Girls Girls Girls, "Much could be undone by saying more." The chorus is based on "Ghetto Child" by The Detroit Spinners.
"Alison" was released as a single in the United Kingdom with a B-side of "Welcome to the Working Week" and as two singles in the United States; one with a mono version of the same song on the B-side, the other with "Miracle Man". The US (and Canadian) single versions of "Alison" are unique in that someone at CBS in the US decided to add synth-strings, background singers and echo to the song. The single did not chart.
Linda Ronstadt recorded a cover version of "Alison" on her album Living in the USA, in 1978, which sold over 2 million copies. Released as the disc's fourth single on Asylum Records, it was produced by her long time producer Peter Asher. Ronstadt hit No. 30 in the U.S. on the adult contemporary chart and No. 66 in the United Kingdom. Years later, Costello joked that he might have been publicly derisive of Ronstadt's version, "but I didn't mind spending the money that she earned me". Costello donated royalties from Ronstadt's version to the African National Congress after she played at Sun City in South Africa.