The last quality research I read suggests that there is a therapeutic benefit to acupuncture, though it is not due to the reasons the acupuncturists claim, and there is no scientific mechanism for how it could treat disease, allergy, or any number of other ailments its devotees claim it treats. The whole practice is based in magical thinking, but the actual insertion of needles into the muscles has been shown to have effect.
In one of the most well-designed studies on the efficacy of acupuncture I've read to date, one group was given "real" acupuncture by acupuncturists who were trained in and believed in all the magical stuff, once group was given fake acupuncture, the insertion of needles into random points as apposed to chi points, and another two groups were given either real or sham acupuncture, but with the needle encased in a device that concealed whether or not it actually penetrated, so neither the subject, not the acupuncturist knew whether or not the needle was being inserted -- this effectively blinded the trial. They found that it does not matter where the needles are inserted, but that there is an effect when comparing needles actually being inserted to the patient just thinking needles are being inserted, so it's not just the placebo affect. It could be the same thing that's going on when you bang your elbow and automatically rub it, or when you scratch an itch; adding a new type of sensory input can ease pain.
The evidence shows that the majority of the effect of acupuncture is a combination of placebo effect with the actual therapeutic benefits of the other services provided (dark relaxing atmosphere, massage, excellent bedside manner, etc.).
All the stuff about chi and energy flows and blockages is just make-believe, though.
I heard a neurologist once relate an experience he had in China. He was invited to watch a surgery being performed with the patient given only acupuncture as anesthesia. He said that the patient kept repeating a single word over and over, very quietly. He finally asked his translator what the patient was saying, only to be told he was moaning, "Pain...pain...pain." At which point the neurologist pointed this out to the surgeon, who then yelled at the patient to shut up. And he did.