An Alliance is a relationship formed between two(initially) or more Guilds via the Guild menu. One guild initiates the process by inviting another guild to join the alliance and providing a name for the alliance. This originating guild is colloquially said to "hold" the alliance because they can add or remove additional guilds, declare war against other guilds or alliances and other such administrative tasks.

Alliances are commonly used in Ultima Online to organize groups of players through their guilds where the players may interact at a deeper and more permanent level than a forming a party, which is a temporary arrangement often for a few hours of adventure.

One of the primary benefits of being a member of an Alliance include being able to chat with all other members online via the persistent Alliance chat channel(this feature may also be set to Ignored status where messages are not seen via character settings menu.

Additionally, alliance members may fight, die, kill and loot each other so a level of trust is necessary before joining an alliance. If an alliance declares war on another guild or alliance and they accept, all members of all guilds in both alliance are now fair game for combat. A guild which is a member of an alliance may leave the alliance at any time via the guild administration menu and committed by any guild member with a sufficient access level.