diff --git a/xarray/core/dataset.py b/xarray/core/dataset.py
index 450ff836b2e..126c3deceb8 100644
--- a/xarray/core/dataset.py
+++ b/xarray/core/dataset.py
@@ -4271,7 +4271,6 @@ def reduce(
         keep_attrs: bool = None,
         keepdims: bool = False,
         numeric_only: bool = False,
-        allow_lazy: bool = None,
         **kwargs: Any,
     ) -> "Dataset":
         """Reduce this dataset by applying `func` along some dimension(s).
@@ -4346,7 +4345,6 @@ def reduce(
                         dim=reduce_dims,
                         keep_attrs=keep_attrs,
                         keepdims=keepdims,
-                        allow_lazy=allow_lazy,
                         **kwargs,
                     )
 
diff --git a/xarray/core/variable.py b/xarray/core/variable.py
index f4ced459a3a..57dfe3d9091 100644
--- a/xarray/core/variable.py
+++ b/xarray/core/variable.py
@@ -1582,7 +1582,6 @@ def reduce(
         axis=None,
         keep_attrs=None,
         keepdims=False,
-        allow_lazy=None,
         **kwargs,
     ):
         """Reduce this array by applying `func` along some dimension(s).
@@ -1624,24 +1623,14 @@ def reduce(
         if dim is not None:
             axis = self.get_axis_num(dim)
 
-        if allow_lazy is not None:
-            warnings.warn(
-                "allow_lazy is deprecated and will be removed in version 0.16.0. It is now True by default.",
-                DeprecationWarning,
-            )
-        else:
-            allow_lazy = True
-
-        input_data = self.data if allow_lazy else self.values
-
         with warnings.catch_warnings():
             warnings.filterwarnings(
                 "ignore", r"Mean of empty slice", category=RuntimeWarning
             )
             if axis is not None:
-                data = func(input_data, axis=axis, **kwargs)
+                data = func(self.data, axis=axis, **kwargs)
             else:
-                data = func(input_data, **kwargs)
+                data = func(self.data, **kwargs)
 
         if getattr(data, "shape", ()) == self.shape:
             dims = self.dims
diff --git a/xarray/tests/test_variable.py b/xarray/tests/test_variable.py
index 08fe0739760..cad565f5255 100644
--- a/xarray/tests/test_variable.py
+++ b/xarray/tests/test_variable.py
@@ -1570,10 +1570,6 @@ def test_reduce(self):
 
         with raises_regex(ValueError, "cannot supply both"):
             v.mean(dim="x", axis=0)
-        with pytest.warns(DeprecationWarning, match="allow_lazy is deprecated"):
-            v.mean(dim="x", allow_lazy=True)
-        with pytest.warns(DeprecationWarning, match="allow_lazy is deprecated"):
-            v.mean(dim="x", allow_lazy=False)
 
     @pytest.mark.parametrize("skipna", [True, False])
     @pytest.mark.parametrize("q", [0.25, [0.50], [0.25, 0.75]])