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i have seen random references to alien allies but not much else. knowing that the Imperium is xenophobic just raises the question of who exactly are these allies? why are they allies? or am i misunderstanding something?

most alies are humans that , because the planet they live mostly, they have altered their DNA. Other allies are out of the IoM

It is less like a conventional alliance, and more like a three way battle with the two nicer sides deciding to work together 99% of the time.

The enemy of my Enemy

or even just:

Gaurdsmen or (Brothers, Sisters, Skittarri designation....) stop shooting those devient Xenos for the moment and shoot the other devient Xenos, we will come back to the others in due course.

Alliances between the Imperium and Xenos are always temporary. However, sometimes a lone planet allies with a nearby alien species, but this is nominally considered heretical.