This classification is based on the distribution of alkaloids in various plant families, like solanaceous or papilionaceous alkaloids. 

Some times they are grouped as per the name of grouped genus in which they occur, e.g. ephedra, cinchona, etc.

This method gives significance to the precursor from which the alkaloids are biosynthesized in the plant. 

Hence the variety of alkaloids with different taxonomic distribution and physiological activities can be brought under same group, if they are derived  from  same precursor, e.g.  all indole alkaloids  from tryptophan are grouped together. 

Alkaloids derived from amino acid precursor are grouped in same class such as ornithine, lysine, tyrosine, phenylalanine, tryptophan, etc. 

This classification is based on the physiological action or biological activity of alkaloids on animals like CNS stimulants or depressants, sympathomimetics,  analgesics,  purgatives,  etc. 

This  method  does  not  take  account  of chemical nature of alkaloids. 

Within the same chemical structure the alkaloids can exhibits more than one physiological action e.g. morphine is narcotic-analgesic, while quinidine is cardiac depressant.

this classification is most accepted way to specify the alkaloids.

The alkaloids are categorised into three divisions.

True alkaloids: These have heterocyclic ring with nitrogen and derived from amino acids.

Proto alkaloids: These does not have heterocyclic ring with nitrogen and derive from amino acids, e.g. colchicine.

Pseudo alkaloids: These have heterocyclic ring with nitrogen and derived from terpenoids or purines but not derived from amino acids.