Spurs suffered a chastening 5-1 aggregate defeat to Borussia Dortmund after going down 2-1 at White Hart Lane on Thursday night.
But they remain in the hunt for a first league title since 1961, lying five points behind leaders Leicester with eight games remaining.
Boss Mauricio Pochettino again rotated his squad for the tie against the German side, but Alli knows that policy will be vindicated if they overhaul the Foxes.
"We know we are a great team," said the England midfielder.
"We can't let this dishearten us. We've got to keep the form we've had in the Premier League and carry on until the end of the season.
"If we win the league this will be forgotten.
"It's a bit of a blow for the confidence but it's important that we keep our heads up and in the next game get the three points and get back on track.
"We are second in the league, five points behind Leicester. It's important we don't think about that too much and don't get carried away too much with ourselves.
"It's just about taking each game as it comes and hopefully being up there at the end of the season."
Source: PA