The 28-year-old actress praised the controversial 80-year-old director in the July 4 issue of Hamptons magazine after starring in Allen's movie Café Society.
"It's really cool to work with a director who's done so much, because he knows exactly what he wants," Lively said. "It gives you a level of confidence because when he's got it, he knows he's got it."
"He also is really encouraging as to why he cast you, so he'll say, 'Say the dialogue that's written and then you can improvise for a while,'" she revealed. "He's very empowering."
Café Society marks Lively's first collaboration with Allen, but perhaps not her last. The actress greatly enjoyed working with the director, saying he creates a supportive and "very pleasant" set.
"Everybody's just happy to be there and happy to be making a movie, and happy to be a part of film history," she said. "For him to have that confidence in you almost gives you the confidence in yourself to just go with the flow."
Lively's interview follows renewed allegations that Allen sexually abused his daughter Dylan Farrow as a child. The director's son Ronan Farrow criticized Lively and other celebrities for working with Allen prior to Café Society's premiere at Cannes in May.
"The old-school media's slow evolution has helped create a culture of impunity and silence," Ronan said, suggesting the media hasn't given due attention to Dylan's claims. "Actors, including some I admire greatly, continue to line up to star in [Allen's] movies."
"[Lively and Kristen Stewart] can trust that the press won't ask them the tough questions," he added. "That kind of silence isn't just wrong. It's dangerous. It sends a message to victims that it's not worth the anguish of coming forward."