The 31-year-old's captaincy was reviewed at the start of the year after he was sent off for kicking Fernando Amorebieta in the 2-1 defeat at Fulham.
It was Nolan's second red card in less than four weeks after lunging at Jordan Henderson against Liverpool, leading Allardyce to say "there's something wrong with his mentality at the minute".
The Hammers' captain has certainly made amends since then, netting five goals in as many league games since returning from suspension.
"I can believe the turnaround because I know Kevin's qualities," Allardyce told Sky Sports.
"What I like about it is that he has gone about his job and made sure he repays everybody at the club for what happened.
"It was the lowest point of his career, I think, because it was not just one sending off but two in a short period of time.
"The contribution now is massive and it is not just the goals, but the pass he made for the first goal - a top quality pass at this level, which split open a very resilient Southampton defence. Long may it continue."
Nolan has been key in West Ham's revival, with their 100 per cent record in February taking them from the relegation zone to the relatively dizzy heights of the top half.
The latest win came courtesy of strikes from Matt Jarvis, Carlton Cole and Nolan, as the Hammers turned the match on its head following Maya Yoshida's early header.
"It has been a fantastic run for us," Allardyce added.
"The four wins on the trot from where we were is an outstanding performance by the players.
"I thank them for their efforts and the quality they are showing at the moment.
"In the Premier League it is all about the resilient qualities in defence and you have to score a goal, which today contributed massively in us winning this game."