Embodiments of the present disclosure provide an Internet Protocol address allocation method and a router. The Internet Protocol address allocation method of the present disclosure includes receiving a delegate prefix of an upper-level network device, where the upper-level network device is a network device connected to a wide area network interface of the router; generating a local prefix of the router and a delegate prefix of the router according to the delegate prefix of the upper-level network device; and sending the local prefix of the router and the delegate prefix of the router to a lower-level router of the router. Internet Protocol addresses of devices in a cascaded network can be obtained in the embodiments of the present disclosure.