This article discusses IOTATION, a process that has been analyzed in generative phonology as a palatalization rule. We argue that optimality theory predicts the treatment of this process in terms of allomorphy, which in fact is desirable for a synchronic analysis. The consequence is that, with regard to iotation effects, the task of phonology is to account for the distribution of allomorphs rather than to derive them from a single underlying representation. While, as a result of diachronic changes, the allomorphs are arbitrary, their distribution is not. It follows from the interaction of universal phonological and morphological constraints, and from the considerations of segment markedness.