Power from a modular chassis to plural modular information handling systems contained by the chassis is dynamically allocated according to power consumed at each modular information handling system and a priority associated with each modular information handling system. A power manager of the modular chassis allocates power by setting a maximum power for each modular information handling system based upon a priority for each modular information handling system. A power monitor on a modular information handling system requests additional power allocation if power consumed is within a predetermined amount of the maximum power for that system. The power manager allocates additional power in response to the request if another modular information handling system has excess power allocated or if the requesting modular information handling system has a higher priority than another modular information handling system. The requesting system's maximum power is increased and the other system maximum power is decreased so that the maximum power available from the chassis is not exceeded.