content: <PAGE>   1
        As filed with the Securities and Exchange Commission on March 5, 1999
                                                        Registration No. 333-_____
  
  ================================================================================
  
                         SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C. 20549
  
                                      FORM S-8
                               REGISTRATION STATEMENT
                          UNDER THE SECURITIES ACT OF 1933
  
                              ALLEGIANCE TELECOM, INC.
               (Exact name of registrant as specified in its charter)
  
                  Delaware
       (State or other jurisdiction of                          75-2721491
       incorporation or organization)                        (I.R.S. Employer
                                                            Identification No.)
          1950 Stemmons Freeway
               Suite 3026
              Dallas, Texas                                       75207
  (Address of Principal Executive Offices)                      (Zip Code)
  
           ALLEGIANCE TELECOM, INC. EMPLOYEE STOCK DISCOUNT PURCHASE PLAN
                              (Full Title of the Plan)
  
                                  Royce J. Holland
                  Chairman of the Board and Chief Executive Officer
                              Allegiance Telecom, Inc.
                                1950 Stemmons Freeway
                                     Suite 3026
                                 Dallas, Texas 75207
                                   (214) 261-7100
              (Name, address including zip code, and telephone number,
                     including area code, of Agent for Service)
  
                                      Copy to:
  
                              Mark B. Tresnowski, Esq.
                      Senior Vice President and General Counsel
                              Allegiance Telecom, Inc.
                            4 Westbrook Corporate Center
                                      Suite 400
                             Westchester, Illinois 60154
                                   (708) 836-5200
  
                           CALCULATION OF REGISTRATION FEE
  
  <TABLE>
  <CAPTION>
  
  --------------------------------------------------------------------------------------------------------------------
  
                                                         PROPOSED MAXIMUM     PROPOSED MAXIMUM         AMOUNT OF
    TITLE OF SECURITIES TO BE        AMOUNT TO BE       OFFERING PRICE PER   AGGREGATE OFFERING      REGISTRATION
           REGISTERED               REGISTERED(1)            SHARE(2)               PRICE                 FEE
  --------------------------------------------------------------------------------------------------------------------
  <S>                            <C>                    <C>                  <C>                     <C>
  Common Stock, par value
  $0.01 per share...........     2,305,718 shares (3)        $22.9375           $ 52,887,407           $ 14,703
  --------------------------------------------------------------------------------------------------------------------
  </TABLE>
  
  (1)  Pursuant to Rule 416 of the Securities Act of 1933, this Registration
       Statement also covers such additional shares of Common Stock as may become
       issuable pursuant to anti-dilution provisions of the employee benefit plan
       described herein.
  
  (2)  Estimated pursuant to Rule 457(c) and (h), solely for purposes of
       calculating the amount of the registration fee, based upon the average of
       the high and low prices reported for the Common Stock on the Nasdaq
       National Market on March 3, 1999, of $22.9375.
  
  (3)  Shares reserved for issuance under the Allegiance Telecom, Inc. Employee
       Stock Discount Purchase Plan.
  
  ================================================================================
  
  <PAGE>   2
  
  
                                       PART I
  
                INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
  
  
  ITEM 1.  PLAN INFORMATION.
  
           The documents containing the information specified in Part I, Items 1
           and 2, will be delivered in accordance with Rule 428(b)(1) of the
           Securities Act of 1933, as amended ("Securities Act"). Such documents
           are not required to be, and are not, filed with the Securities and
           Exchange Commission, either as part of this Form S-8 Registration
           Statement or as prospectuses or prospectus supplements pursuant to Rule
           424. These documents, and the documents incorporated by reference in
           this Registration Statement pursuant to Item 3 of Part II of this
           Registration Statement, taken together, constitute a prospectus that
           meets the requirements of Section 10(a) of the Securities Act.
  
  
  ITEM 2.  REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.
  
           Upon written or oral request, any of the documents incorporated by
           reference in Item 3 of Part II of this Registration Statement (which
           documents are incorporated by reference in the Section 10(a)
           Prospectus), other documents required to be delivered to eligible
           employees pursuant to Rule 428(b) or additional information about the
           Allegiance Telecom, Inc. Employee Stock Discount Purchase Plan are
           available without charge by contacting:
  
  
                                  Patricia E. Koide
               Senior Vice President of Human Resources, Real Estate,
                           Facilities and Administration
                              Allegiance Telecom, Inc.
                            4 Westbrook Corporate Center
                                      Suite 400
                             Westchester, Illinois 60154
                                   (708) 836-5200
  
  
  
  
                                         2
  
  
  <PAGE>   3
  
  
  
                                       PART II
                 INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
  
  
  ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. The following
  documents, which have been filed by Allegiance Telecom, Inc. (the "Company")
  with the Securities and Exchange Commission, are incorporated in this
  Registration Statement by reference:
  
                    (a) The Company's Prospectus, dated June 30, 1998, filed
           pursuant to Rule 424(b) of the Securities Act, which relates to the
           Company's Registration Statement on Form S-1 (Registration File No.
           333-53475).
  
                    (b) The description of the Company's Common Stock, par value
           $.01 per share (the "Common Stock") contained in the Company's
           Registration Statement on Form 8-A, filed with the Commission on June
           23, 1998, which incorporated by reference the section titled
           "Description of Capital Stock" contained in the Prospectus as part of
           the Company's Registration Statement on Form S-1 (Registration File No.
           333-53475).
  
                    (c) The Company's Quarterly Report on Form 10-Q for the fiscal
           quarter ended June 30, 1998, filed with the Commission on August 12,
           1998.
  
                    (d) The Company's Quarterly Report on Form 10-Q for the fiscal
           quarter ended September 30, 1998, filed with the Commission on November
           5, 1998.
  
                    (e) All reports and other documents subsequently filed by the
           Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
           Securities Exchange Act of 1934, as amended (the "Exchange Act"), prior
           to the filing of a post-effective amendment which indicates that all
           securities offered hereby have been sold or which deregisters all
           securities then remaining unsold, shall be deemed to be incorporated by
           reference herein and to be a part hereof from the date of the filing of
           such reports and documents.
  
           Any statement contained in a document incorporated or deemed to be
  incorporated by reference herein shall be deemed to be modified or superseded
  for purposes of this Registration Statement to the extent that a statement
  contained herein or in any other subsequently filed document which also is or is
  deemed to be incorporated by reference herein modifies or supersedes such
  statement. Any statement so modified or superseded shall not be deemed, except
  as so modified or superseded, to constitute a part of this Registration
  Statement.
  
  
  ITEM 4.  DESCRIPTION OF SECURITIES. Not Applicable.
  
  
  ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. The validity of the Common Stock
  to be issued under the Plan will be passed upon for the Company by Mark B.
  Tresnowski, its Senior Vice President and General Counsel. Mr. Tresnowski (a)
  owns 3,000 shares of Common Stock and (b) has stock options to purchase 330,000
  shares of Common Stock at an exercise price of $1.00 per share.
  
  
  ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 102(b)(7) of the
  Delaware General Corporation Law (the "DGCL") permits a corporation to provide
  in its certificate of incorporation that a director of the corporation shall not
  be personally liable to the corporation or its stockholders for monetary damages
  for breach of fiduciary duty as a director, except for liability (i) for any
  transaction from which the director derives an improper personal benefit, (ii)
  for acts or omissions not in good faith or that involve intentional misconduct
  or a knowing violation of law, (iii) for improper payment of dividends or
  redemptions of shares or (iv) for any breach of a director's duty of loyalty to
  the company or its stockholders. Article X, Part A, of the Company's Amended and
  Restated Certificate of Incorporation (the "Restated Certificate") includes such
  a provision.
  
  The Company's Restated Certificate provides that each person who was or is made
  a party or is threatened to be made a party to or is otherwise involved
  (including involvement as a witness) in any action, suit or proceeding, whether
  civil, criminal, administrative or investigative (a "proceeding"), by reason of
  the fact that he or she is or was a Director or officer of the Company or, while
  a Director or 
  
  
  
                                         3
  
  <PAGE>   4
  
  
  officer of the Company, is or was serving at the request of the Company as a
  Director, officer, employee or agent of another corporation or of a partnership,
  joint venture, trust or other enterprise, including service with respect to an
  employee benefit plan (an "indemnitee"), whether the basis of such proceeding is
  alleged action in an official capacity as a Director or officer or in any other
  capacity while serving as a Director or officer, will be indemnified and held
  harmless by the Company to the fullest extent authorized by the DGCL, as the
  same exists or may hereafter be amended (but, in the case of any such amendment,
  only to the extent that such amendment permits the Company to provide broader
  indemnification rights then permitted prior thereto), against all expense,
  liability and loss (including attorneys' fees, judgment, fines, excise taxes or
  penalties and amounts paid in settlement) reasonably incurred or suffered by
  such indemnitee in connection therewith and such indemnification will continue
  as to an indemnitee who has ceased to be a Director, officer, employee or agent
  and shall inure to the benefit of the indemnitee's heirs, executors and
  administrators under the Restated Certificate. This right of indemnification is
  a contractual right and includes the obligation of the Company to pay the
  expenses incurred in defending any such proceeding in advance of its final
  disposition (an "advance of expenses"); provided, however, that, if and to the
  extent that the DGCL requires, an advance of expenses incurred by indemnitee in
  his or her capacity as a Director or officer (and not in any other capacity in
  which service was or is rendered by such indemnitee, including, without
  limitation, service to an employee benefit plan) will be made only upon delivery
  to the Company of an undertaking, by or on behalf of such indemnitee, to repay
  all amounts so advanced if it will ultimately be determined by final judicial
  decision from which there is no further right to appeal that such indemnitee is
  not entitled to be indemnified for such expenses. The Company may, by action of
  its Board of Directors, provide indemnification to employees and agents of the
  Company with the same or lesser scope and effect as the foregoing
  indemnification of Directors and officers.
  
  The Company plans to enter into indemnification agreements with its current
  Directors and executives officers substantially in the form previously filed
  with the Commission by the Company and anticipates entering into such agreements
  in the future with any new Director or executive officer.
  
  
  ITEM 7.  EXEMPTION FROM REGISTRATION CLAIMED.  Not applicable.
  
  
  ITEM 8.  EXHIBITS. An Exhibit index is located on page 8.
  
          Number                          Description
          ------                          -----------
  
           3.1      Amended and Restated Certificate of Incorporation of the
                    Company, incorporated by reference to Exhibit 3.1 of the
                    Company's Quarterly Report on Form 10-Q for the fiscal quarter
                    ended June 30, 1998, filed with the Commission on August 12,
                    1998.
  
           3.2      Amended and Restated Bylaws of the Company, incorporated by
                    reference to Exhibit 3.2 of the Company's Quarterly Report on
                    Form 10-Q for the fiscal quarter ended June 30, 1998, filed
                    with the Commission on August 12, 1998.
  
           4.1      Form of certificate representing shares of Common Stock, $.01
                    par value per share, incorporated by reference to Exhibit 4.5
                    of the Company's Registration Statement on Form S-1
                    (Registration File No. 333-53475).
  
           *4.2     Allegiance Telecom, Inc. Employee Stock Discount Purchase
                    Plan.
  
           *5.1     Opinion of Mark B. Tresnowski, Senior Vice President and
                    General Counsel of Allegiance Telecom, Inc., with respect to
                    the legality of the shares of the Common Stock being
                    registered hereby.
  
           *23.1    Consent of Arthur Andersen LLP.
  
           23.2     Consent of Mark B. Tresnowski (included in Exhibit 5.1).
  
           24.1     Powers of Attorney (included in Part II of this Registration
                    Statement). 
  
  --------------
  
  * Filed herewith
  
  
  
  
                                         4
  
  
  <PAGE>   5
  
  
  ITEM 9. UNDERTAKINGS.
  
           (a)      The undersigned Registrant hereby undertakes:
  
                    (1)      to file, during any period in which offers or sales
                             are being made, a post-effective amendment to this
                             Registration Statement (i) to include any prospectus
                             required by Section 10(a)(3) of the Securities Act;
                             (ii) to reflect in the prospectus any facts or events
                             arising after the effective date of this Registration
                             Statement (or most recent post-effective amendment
                             thereof) which, individually or in the aggregate,
                             represent a fundamental change in the information set
                             forth in this Registration Statement; and (iii) to
                             include any material information with respect to the
                             plan of distribution not previously disclosed in this
                             Registration Statement or any material change to such
                             information in this Registration Statement;
  
                             provided, however, that paragraphs (a)(1)(i) and
                             (a)(1)(ii) do not apply if the information required
                             to be included in a post-effective amendment by those
                             paragraphs is contained in periodic reports filed
                             with or furnished to the Commission by the Registrant
                             pursuant to Section 13 or Section 15(d) of the
                             Exchange Act that are incorporated by reference in
                             this Registration Statement;
  
                    (2)      that, for the purpose of determining any liability
                             under the Securities Act, each such post-effective
                             amendment shall be deemed to be a new registration
                             statement relating to the securities offered therein,
                             and the offering of such securities at that time
                             shall be deemed to be the initial bona fide offering
                             thereof; and
  
                    (3)      to remove from registration by means of a
                             post-effective amendment any of the securities being
                             registered which remain unsold at the termination of
                             the offering.
  
           (b) The undersigned Registrant hereby undertakes that, for purposes of
          determining any liability under the Securities Act, each filing of the
          Registrant's annual report pursuant to Section 13(a) or Section 15(d) of
          the Exchange Act (and, where applicable, each filing of an employee
          benefit plan's annual report pursuant to Section 15(d) of the Exchange
          Act) that is incorporated by reference in this Registration Statement
          shall be deemed to be a new registration statement relating to the
          securities offered herein, and the offering of such securities at that
          time shall be deemed to be the initial bona fide offering thereof.
  
           (c) Insofar as indemnification for liabilities arising under the
          Securities Act may be permitted to directors, officers and controlling
          persons of the Registrant pursuant to the foregoing provisions, or
          otherwise, the Registrant has been advised that in the opinion of the
          Commission such indemnification is against public policy as expressed in
          the Securities Act and is, therefore, unenforceable. In the event that a
          claim for indemnification against such liabilities (other than the
          payment by the Registrant of expenses incurred or paid by a director,
          officer or controlling person of the Registrant in the successful
          defense of any action, suit or proceeding) is asserted by such director,
          officer or controlling person in connection with the securities being
          registered, the Registrant will, unless in the opinion of its counsel
          the matter has been settled by controlling precedent, submit to a court
          of appropriate jurisdiction the question whether such indemnification by
          it is against public policy as expressed in the Securities Act and will
          be governed by the final adjudication of such issue.
  
  
  
  
  
  
                                         5
  
  
  <PAGE>   6
  
  
  
                                     SIGNATURES
  
  
          Pursuant to the requirements of the Securities Act of 1933, the
  Registrant certifies that it has reasonable grounds to believe that it meets all
  of the requirements for filing on Form S-8 and has duly caused this Registration
  Statement to be signed on its behalf by the undersigned, thereunto duly
  authorized, in the City of Dallas, State of Texas, on March 5, 1999.
  
                                        ALLEGIANCE TELECOM, INC.
  
  
  
                                        By  /s/ ROYCE J. HOLLAND
                                          ---------------------------------
                                          Royce J. Holland, Chairman of the Board
                                          and Chief Executive Officer
  
  
  
                                  POWER OF ATTORNEY
  
           KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
  appears below constitutes and appoints Royce J. Holland, Thomas M. Lord, Dennis
  M. Maunder and Mark B. Tresnowski and each of them, his true and lawful
  attorneys-in-fact and agents, with full power of substitution and
  resubstitution, for him and in his name, place and stead, in any and all
  capacities, to sign any or all amendments (including post-effective amendments)
  to this Registration Statement, and to file the same, with all exhibits thereto,
  and other documents in connection therewith, with the Securities and Exchange
  Commission, granting unto said attorneys-in-fact and agents, and each of them,
  full power and authority to do and perform each and every act and thing
  requisite and necessary to be done in and about the premises, as fully to all
  intents and purposes as he might or could do in person, hereby ratifying and
  confirming all that said attorneys-in-fact and agents or any of them, or their
  or his substitute or substitutes, may lawfully do or cause to be done by virtue
  hereof.
  
                                        ****
  
           Pursuant to the requirements of the Securities Act of 1933, this
  Registration Statement has been signed by the following persons in the
  capacities indicated on March 5, 1999.
  
  <TABLE>
  
  <S>                                               <C>
  /s/ ROYCE J. HOLLAND                              Chairman of the Board and Chief Executive Officer (Principal
  -----------------------------------               Executive Officer)
  Royce J. Holland                                     
  
  
  /s/ C. DANIEL YOST                                President, Chief Operating Officer and Director
  -----------------------------------
  C. Daniel Yost
  
  
  /s/ THOMAS M. LORD                                Executive Vice President, Chief Financial Officer, and
  -----------------------------------               Director (Principal Financial Officer)
  Thomas M. Lord                                    
  
  
  /s/ DENNIS M. MAUNDER                             Vice President and Controller (Principal Accounting Officer)
  -----------------------------------
  Dennis M. Maunder
  
  
  /s/ JOHN J. CALLAHAN                              Senior Vice President of Sales and Marketing and Director
  -----------------------------------
  John J. Callahan
  
  
  /s/ PAUL D. CARBERY                               Director
  -----------------------------------
  Paul D. Carbery
  
  
  /s/ JAMES E. CRAWFORD, III                        Director
  -----------------------------------
  James E. Crawford, III
  </TABLE>
  
  
                                         6
  
  <PAGE>   7
  
  <TABLE>
  
  <S>                                               <C>
  /s/ JOHN B. EHRENKRANZ                            Director
  -----------------------------------
  John B. Ehrenkranz
  
  
  /s/ PAUL J. FINNEGAN                              Director
  -----------------------------------
  Paul J. Finnegan
  
  
  /s/ RICHARD D. FRISBIE                            Director
  -----------------------------------
  Richard D. Frisbie
  
  
  /s/ REED E. HUNDT                                 Director
  -----------------------------------
  Reed E. Hundt
  
  
  /s/ JAMES N. PERRY, JR.                           Director
  -----------------------------------
  James N. Perry, Jr.
  </TABLE>
  
  
  
  
                                         7
  
  <PAGE>   8
  
  
  
                                    EXHIBIT INDEX
  
  <TABLE>
  <CAPTION>
  
         Exhibit 
          Number    Description
         --------   -----------
  <S>               <C>
           3.1      Amended and Restated Certificate of Incorporation of the
                    Company, incorporated by reference to Exhibit 3.1 of the
                    Company's Quarterly Report on Form 10-Q for the fiscal quarter
                    ended June 30, 1998, filed with the Commission on August 12,
                    1998.
  
           3.2      Amended and Restated Bylaws of the Company, incorporated by
                    reference to Exhibit 3.2 of the Company's Quarterly Report on
                    Form 10-Q for the fiscal quarter ended June 30, 1998, filed
                    with the Commission on August 12, 1998.
  
           4.1      Form of certificate representing shares of Common Stock, $.01
                    par value per share, incorporated by reference to Exhibit 4.5
                    of the Company's Registration Statement on Form S-1
                    (Registration File No. 333-53475).
  
           *4.2     Allegiance Telecom, Inc. Employee Stock Discount Purchase
                    Plan.
  
           *5.1     Opinion of Mark B. Tresnowski, Senior Vice President and
                    General Counsel of Allegiance Telecom, Inc., with respect to
                    the legality of the shares of the Common Stock being
                    registered hereby.
  
           *23.1    Consent of Arthur Andersen LLP.
  
           23.2     Consent of Mark B. Tresnowski (included in Exhibit 5.1).
  
           24.1     Powers of Attorney (included in Part II of this Registration
                    Statement). 
  </TABLE>
  
  
  --------------
  
  * Filed herewith
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metadata_filer: {"company-data": {"conformed-name": "ALLEGIANCE TELECOM INC", "cik": "0001058703", "assigned-sic": "4813", "irs-number": "752721491", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-73453", "film-number": "99558452"}, "business-address": {"street1": "1950 STEMMONS FRWY", "street2": "STE 3026", "city": "DALLAS", "state": "TX", "zip": "75207", "phone": "2148537100"}, "mail-address": {"street1": "1950 STEMMONS FRWY", "street2": "STE 3026", "city": "DALLAS", "state": "TX", "zip": "75207"}}
text: 1
        As filed with the Securities and Exchange Commission on March 5, 1999
                                                        Registration No. 333-_____
  
  ================================================================================
  
                         SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C. 20549
  
                                      FORM S-8
                               REGISTRATION STATEMENT
                          UNDER THE SECURITIES ACT OF 1933
  
                              ALLEGIANCE TELECOM, INC.
               (Exact name of registrant as specified in its charter)
  
                  Delaware
       (State or other jurisdiction of                          75-2721491
       incorporation or organization)                        (I.R.S. Employer
                                                            Identification No.)
          1950 Stemmons Freeway
               Suite 3026
              Dallas, Texas                                       75207
  (Address of Principal Executive Offices)                      (Zip Code)
  
           ALLEGIANCE TELECOM, INC. EMPLOYEE STOCK DISCOUNT PURCHASE PLAN
                              (Full Title of the Plan)
  
                                  Royce J. Holland
                  Chairman of the Board and Chief Executive Officer
                              Allegiance Telecom, Inc.
                                1950 Stemmons Freeway
                                     Suite 3026
                                 Dallas, Texas 75207
                                   (214) 261-7100
              (Name, address including zip code, and telephone number,
                     including area code, of Agent for Service)
  
                                      Copy to:
  
                              Mark B. Tresnowski, Esq.
                      Senior Vice President and General Counsel
                              Allegiance Telecom, Inc.
                            4 Westbrook Corporate Center
                                      Suite 400
                             Westchester, Illinois 60154
                                   (708) 836-5200
  
                           CALCULATION OF REGISTRATION FEE
  --------------------------------------------------------------------------------------------------------------------
  
                                                         PROPOSED MAXIMUM     PROPOSED MAXIMUM         AMOUNT OF
    TITLE OF SECURITIES TO BE        AMOUNT TO BE       OFFERING PRICE PER   AGGREGATE OFFERING      REGISTRATION
           REGISTERED               REGISTERED(1)            SHARE(2)               PRICE                 FEE
  --------------------------------------------------------------------------------------------------------------------
  Common Stock, par value
  $0.01 per share...........     2,305,718 shares (3)        $22.9375           $ 52,887,407           $ 14,703
  --------------------------------------------------------------------------------------------------------------------
  (1)  Pursuant to Rule 416 of the Securities Act of 1933, this Registration
       Statement also covers such additional shares of Common Stock as may become
       issuable pursuant to anti-dilution provisions of the employee benefit plan
       described herein.
  
  (2)  Estimated pursuant to Rule 457(c) and (h), solely for purposes of
       calculating the amount of the registration fee, based upon the average of
       the high and low prices reported for the Common Stock on the Nasdaq
       National Market on March 3, 1999, of $22.9375.
  
  (3)  Shares reserved for issuance under the Allegiance Telecom, Inc. Employee
       Stock Discount Purchase Plan.
  
  ================================================================================
  2
  
                                       PART I
  
                INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
  
  ITEM 1.  PLAN INFORMATION.
  
           The documents containing the information specified in Part I, Items 1
           and 2, will be delivered in accordance with Rule 428(b)(1) of the
           Securities Act of 1933, as amended ("Securities Act"). Such documents
           are not required to be, and are not, filed with the Securities and
           Exchange Commission, either as part of this Form S-8 Registration
           Statement or as prospectuses or prospectus supplements pursuant to Rule
           424. These documents, and the documents incorporated by reference in
           this Registration Statement pursuant to Item 3 of Part II of this
           Registration Statement, taken together, constitute a prospectus that
           meets the requirements of Section 10(a) of the Securities Act.
  
  ITEM 2.  REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.
  
           Upon written or oral request, any of the documents incorporated by
           reference in Item 3 of Part II of this Registration Statement (which
           documents are incorporated by reference in the Section 10(a)
           Prospectus), other documents required to be delivered to eligible
           employees pursuant to Rule 428(b) or additional information about the
           Allegiance Telecom, Inc. Employee Stock Discount Purchase Plan are
           available without charge by contacting:
  
                                  Patricia E. Koide
               Senior Vice President of Human Resources, Real Estate,
                           Facilities and Administration
                              Allegiance Telecom, Inc.
                            4 Westbrook Corporate Center
                                      Suite 400
                             Westchester, Illinois 60154
                                   (708) 836-5200
  
                                         2
  3
  
                                       PART II
                 INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
  
  ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. The following
  documents, which have been filed by Allegiance Telecom, Inc. (the "Company")
  with the Securities and Exchange Commission, are incorporated in this
  Registration Statement by reference:
  
                    (a) The Company's Prospectus, dated June 30, 1998, filed
           pursuant to Rule 424(b) of the Securities Act, which relates to the
           Company's Registration Statement on Form S-1 (Registration File No.
           333-53475).
  
                    (b) The description of the Company's Common Stock, par value
           $.01 per share (the "Common Stock") contained in the Company's
           Registration Statement on Form 8-A, filed with the Commission on June
           23, 1998, which incorporated by reference the section titled
           "Description of Capital Stock" contained in the Prospectus as part of
           the Company's Registration Statement on Form S-1 (Registration File No.
           333-53475).
  
                    (c) The Company's Quarterly Report on Form 10-Q for the fiscal
           quarter ended June 30, 1998, filed with the Commission on August 12,
           1998.
  
                    (d) The Company's Quarterly Report on Form 10-Q for the fiscal
           quarter ended September 30, 1998, filed with the Commission on November
           5, 1998.
  
                    (e) All reports and other documents subsequently filed by the
           Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
           Securities Exchange Act of 1934, as amended (the "Exchange Act"), prior
           to the filing of a post-effective amendment which indicates that all
           securities offered hereby have been sold or which deregisters all
           securities then remaining unsold, shall be deemed to be incorporated by
           reference herein and to be a part hereof from the date of the filing of
           such reports and documents.
  
           Any statement contained in a document incorporated or deemed to be
  incorporated by reference herein shall be deemed to be modified or superseded
  for purposes of this Registration Statement to the extent that a statement
  contained herein or in any other subsequently filed document which also is or is
  deemed to be incorporated by reference herein modifies or supersedes such
  statement. Any statement so modified or superseded shall not be deemed, except
  as so modified or superseded, to constitute a part of this Registration
  Statement.
  
  ITEM 4.  DESCRIPTION OF SECURITIES. Not Applicable.
  
  ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. The validity of the Common Stock
  to be issued under the Plan will be passed upon for the Company by Mark B.
  Tresnowski, its Senior Vice President and General Counsel. Mr. Tresnowski (a)
  owns 3,000 shares of Common Stock and (b) has stock options to purchase 330,000
  shares of Common Stock at an exercise price of $1.00 per share.
  
  ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 102(b)(7) of the
  Delaware General Corporation Law (the "DGCL") permits a corporation to provide
  in its certificate of incorporation that a director of the corporation shall not
  be personally liable to the corporation or its stockholders for monetary damages
  for breach of fiduciary duty as a director, except for liability (i) for any
  transaction from which the director derives an improper personal benefit, (ii)
  for acts or omissions not in good faith or that involve intentional misconduct
  or a knowing violation of law, (iii) for improper payment of dividends or
  redemptions of shares or (iv) for any breach of a director's duty of loyalty to
  the company or its stockholders. Article X, Part A, of the Company's Amended and
  Restated Certificate of Incorporation (the "Restated Certificate") includes such
  a provision.
  
  The Company's Restated Certificate provides that each person who was or is made
  a party or is threatened to be made a party to or is otherwise involved
  (including involvement as a witness) in any action, suit or proceeding, whether
  civil, criminal, administrative or investigative (a "proceeding"), by reason of
  the fact that he or she is or was a Director or officer of the Company or, while
  a Director or 
  
                                         3
  4
  
  officer of the Company, is or was serving at the request of the Company as a
  Director, officer, employee or agent of another corporation or of a partnership,
  joint venture, trust or other enterprise, including service with respect to an
  employee benefit plan (an "indemnitee"), whether the basis of such proceeding is
  alleged action in an official capacity as a Director or officer or in any other
  capacity while serving as a Director or officer, will be indemnified and held
  harmless by the Company to the fullest extent authorized by the DGCL, as the
  same exists or may hereafter be amended (but, in the case of any such amendment,
  only to the extent that such amendment permits the Company to provide broader
  indemnification rights then permitted prior thereto), against all expense,
  liability and loss (including attorneys' fees, judgment, fines, excise taxes or
  penalties and amounts paid in settlement) reasonably incurred or suffered by
  such indemnitee in connection therewith and such indemnification will continue
  as to an indemnitee who has ceased to be a Director, officer, employee or agent
  and shall inure to the benefit of the indemnitee's heirs, executors and
  administrators under the Restated Certificate. This right of indemnification is
  a contractual right and includes the obligation of the Company to pay the
  expenses incurred in defending any such proceeding in advance of its final
  disposition (an "advance of expenses"); provided, however, that, if and to the
  extent that the DGCL requires, an advance of expenses incurred by indemnitee in
  his or her capacity as a Director or officer (and not in any other capacity in
  which service was or is rendered by such indemnitee, including, without
  limitation, service to an employee benefit plan) will be made only upon delivery
  to the Company of an undertaking, by or on behalf of such indemnitee, to repay
  all amounts so advanced if it will ultimately be determined by final judicial
  decision from which there is no further right to appeal that such indemnitee is
  not entitled to be indemnified for such expenses. The Company may, by action of
  its Board of Directors, provide indemnification to employees and agents of the
  Company with the same or lesser scope and effect as the foregoing
  indemnification of Directors and officers.
  
  The Company plans to enter into indemnification agreements with its current
  Directors and executives officers substantially in the form previously filed
  with the Commission by the Company and anticipates entering into such agreements
  in the future with any new Director or executive officer.
  
  ITEM 7.  EXEMPTION FROM REGISTRATION CLAIMED.  Not applicable.
  
  ITEM 8.  EXHIBITS. An Exhibit index is located on page 8.
  
          Number                          Description
          ------                          -----------
  
           3.1      Amended and Restated Certificate of Incorporation of the
                    Company, incorporated by reference to Exhibit 3.1 of the
                    Company's Quarterly Report on Form 10-Q for the fiscal quarter
                    ended June 30, 1998, filed with the Commission on August 12,
                    1998.
  
           3.2      Amended and Restated Bylaws of the Company, incorporated by
                    reference to Exhibit 3.2 of the Company's Quarterly Report on
                    Form 10-Q for the fiscal quarter ended June 30, 1998, filed
                    with the Commission on August 12, 1998.
  
           4.1      Form of certificate representing shares of Common Stock, $.01
                    par value per share, incorporated by reference to Exhibit 4.5
                    of the Company's Registration Statement on Form S-1
                    (Registration File No. 333-53475).
  
           *4.2     Allegiance Telecom, Inc. Employee Stock Discount Purchase
                    Plan.
  
           *5.1     Opinion of Mark B. Tresnowski, Senior Vice President and
                    General Counsel of Allegiance Telecom, Inc., with respect to
                    the legality of the shares of the Common Stock being
                    registered hereby.
  
           *23.1    Consent of Arthur Andersen LLP.
  
           23.2     Consent of Mark B. Tresnowski (included in Exhibit 5.1).
  
           24.1     Powers of Attorney (included in Part II of this Registration
                    Statement). 
  
  --------------
  
  * Filed herewith
  
                                         4
  5
  
  ITEM 9. UNDERTAKINGS.
  
           (a)      The undersigned Registrant hereby undertakes:
  
                    (1)      to file, during any period in which offers or sales
                             are being made, a post-effective amendment to this
                             Registration Statement (i) to include any prospectus
                             required by Section 10(a)(3) of the Securities Act;
                             (ii) to reflect in the prospectus any facts or events
                             arising after the effective date of this Registration
                             Statement (or most recent post-effective amendment
                             thereof) which, individually or in the aggregate,
                             represent a fundamental change in the information set
                             forth in this Registration Statement; and (iii) to
                             include any material information with respect to the
                             plan of distribution not previously disclosed in this
                             Registration Statement or any material change to such
                             information in this Registration Statement;
  
                             provided, however, that paragraphs (a)(1)(i) and
                             (a)(1)(ii) do not apply if the information required
                             to be included in a post-effective amendment by those
                             paragraphs is contained in periodic reports filed
                             with or furnished to the Commission by the Registrant
                             pursuant to Section 13 or Section 15(d) of the
                             Exchange Act that are incorporated by reference in
                             this Registration Statement;
  
                    (2)      that, for the purpose of determining any liability
                             under the Securities Act, each such post-effective
                             amendment shall be deemed to be a new registration
                             statement relating to the securities offered therein,
                             and the offering of such securities at that time
                             shall be deemed to be the initial bona fide offering
                             thereof; and
  
                    (3)      to remove from registration by means of a
                             post-effective amendment any of the securities being
                             registered which remain unsold at the termination of
                             the offering.
  
           (b) The undersigned Registrant hereby undertakes that, for purposes of
          determining any liability under the Securities Act, each filing of the
          Registrant's annual report pursuant to Section 13(a) or Section 15(d) of
          the Exchange Act (and, where applicable, each filing of an employee
          benefit plan's annual report pursuant to Section 15(d) of the Exchange
          Act) that is incorporated by reference in this Registration Statement
          shall be deemed to be a new registration statement relating to the
          securities offered herein, and the offering of such securities at that
          time shall be deemed to be the initial bona fide offering thereof.
  
           (c) Insofar as indemnification for liabilities arising under the
          Securities Act may be permitted to directors, officers and controlling
          persons of the Registrant pursuant to the foregoing provisions, or
          otherwise, the Registrant has been advised that in the opinion of the
          Commission such indemnification is against public policy as expressed in
          the Securities Act and is, therefore, unenforceable. In the event that a
          claim for indemnification against such liabilities (other than the
          payment by the Registrant of expenses incurred or paid by a director,
          officer or controlling person of the Registrant in the successful
          defense of any action, suit or proceeding) is asserted by such director,
          officer or controlling person in connection with the securities being
          registered, the Registrant will, unless in the opinion of its counsel
          the matter has been settled by controlling precedent, submit to a court
          of appropriate jurisdiction the question whether such indemnification by
          it is against public policy as expressed in the Securities Act and will
          be governed by the final adjudication of such issue.
  
                                         5
  6
  
                                     SIGNATURES
  
          Pursuant to the requirements of the Securities Act of 1933, the
  Registrant certifies that it has reasonable grounds to believe that it meets all
  of the requirements for filing on Form S-8 and has duly caused this Registration
  Statement to be signed on its behalf by the undersigned, thereunto duly
  authorized, in the City of Dallas, State of Texas, on March 5, 1999.
  
                                        ALLEGIANCE TELECOM, INC.
  
                                        By  /s/ ROYCE J. HOLLAND
                                          ---------------------------------
                                          Royce J. Holland, Chairman of the Board
                                          and Chief Executive Officer
  
                                  POWER OF ATTORNEY
  
           KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
  appears below constitutes and appoints Royce J. Holland, Thomas M. Lord, Dennis
  M. Maunder and Mark B. Tresnowski and each of them, his true and lawful
  attorneys-in-fact and agents, with full power of substitution and
  resubstitution, for him and in his name, place and stead, in any and all
  capacities, to sign any or all amendments (including post-effective amendments)
  to this Registration Statement, and to file the same, with all exhibits thereto,
  and other documents in connection therewith, with the Securities and Exchange
  Commission, granting unto said attorneys-in-fact and agents, and each of them,
  full power and authority to do and perform each and every act and thing
  requisite and necessary to be done in and about the premises, as fully to all
  intents and purposes as he might or could do in person, hereby ratifying and
  confirming all that said attorneys-in-fact and agents or any of them, or their
  or his substitute or substitutes, may lawfully do or cause to be done by virtue
  hereof.
  
                                        ****
  
           Pursuant to the requirements of the Securities Act of 1933, this
  Registration Statement has been signed by the following persons in the
  capacities indicated on March 5, 1999.
  /s/ ROYCE J. HOLLAND                              Chairman of the Board and Chief Executive Officer (Principal
  -----------------------------------               Executive Officer)
  Royce J. Holland                                     
  
  /s/ C. DANIEL YOST                                President, Chief Operating Officer and Director
  -----------------------------------
  C. Daniel Yost
  
  /s/ THOMAS M. LORD                                Executive Vice President, Chief Financial Officer, and
  -----------------------------------               Director (Principal Financial Officer)
  Thomas M. Lord                                    
  
  /s/ DENNIS M. MAUNDER                             Vice President and Controller (Principal Accounting Officer)
  -----------------------------------
  Dennis M. Maunder
  
  /s/ JOHN J. CALLAHAN                              Senior Vice President of Sales and Marketing and Director
  -----------------------------------
  John J. Callahan
  
  /s/ PAUL D. CARBERY                               Director
  -----------------------------------
  Paul D. Carbery
  
  /s/ JAMES E. CRAWFORD, III                        Director
  -----------------------------------
  James E. Crawford, III
  6
  7
  /s/ JOHN B. EHRENKRANZ                            Director
  -----------------------------------
  John B. Ehrenkranz
  
  /s/ PAUL J. FINNEGAN                              Director
  -----------------------------------
  Paul J. Finnegan
  
  /s/ RICHARD D. FRISBIE                            Director
  -----------------------------------
  Richard D. Frisbie
  
  /s/ REED E. HUNDT                                 Director
  -----------------------------------
  Reed E. Hundt
  
  /s/ JAMES N. PERRY, JR.                           Director
  -----------------------------------
  James N. Perry, Jr.
  7
  8
  
                                    EXHIBIT INDEX
  Exhibit 
          Number    Description
         --------   -----------
  3.1      Amended and Restated Certificate of Incorporation of the
                    Company, incorporated by reference to Exhibit 3.1 of the
                    Company's Quarterly Report on Form 10-Q for the fiscal quarter
                    ended June 30, 1998, filed with the Commission on August 12,
                    1998.
  
           3.2      Amended and Restated Bylaws of the Company, incorporated by
                    reference to Exhibit 3.2 of the Company's Quarterly Report on
                    Form 10-Q for the fiscal quarter ended June 30, 1998, filed
                    with the Commission on August 12, 1998.
  
           4.1      Form of certificate representing shares of Common Stock, $.01
                    par value per share, incorporated by reference to Exhibit 4.5
                    of the Company's Registration Statement on Form S-1
                    (Registration File No. 333-53475).
  
           *4.2     Allegiance Telecom, Inc. Employee Stock Discount Purchase
                    Plan.
  
           *5.1     Opinion of Mark B. Tresnowski, Senior Vice President and
                    General Counsel of Allegiance Telecom, Inc., with respect to
                    the legality of the shares of the Common Stock being
                    registered hereby.
  
           *23.1    Consent of Arthur Andersen LLP.
  
           23.2     Consent of Mark B. Tresnowski (included in Exhibit 5.1).
  
           24.1     Powers of Attorney (included in Part II of this Registration
                    Statement).
  --------------
  
  * Filed herewith