The eldest son of an Irish band-sergeant William Wallace began composing marches for his father's band at age eight and at 16 became first violinist for orchestra at Dublin's Theatre Royal. A few years later he was employed as organist of the Thurles Roman Catholic Cathedral and also taught piano at the Ursuline Convent.
Wallace emigrated to the Australian colonies in 1835 with his wife Isabella, son William Jnr, sister Elizabeth (soprano) and brother Wellington (flautist). After a brief stay in Hobart Town they moved to Sydney and the following year opened the first Australian music school. During his time in the city Wallace also imported pianos, gave recitals and organized the first music festival in Australia (in January 1838 at St Mary's Cathedral). Soon after the festival he sailed secretly for Chile leaving behind his family and some £2000 in debts.
Between 1838 to 1843 Wallace travelled widely, and is alleged to have had wild adventures on three continents. While in the USA he undertook a successful tour and helped found the New York Philharmonic Society. He spent time in Germany in 1844 and the following year gave piano recitals in London. 1845 also saw the triumphant premiere of his opera Maritana. His other operas included: Lurline (1860), Matilda of Hungary, The Amber Witch and The Desert Flower. Wallace also composed many hundreds of smaller works.
Wallace became an American citizen in 1850 and although not legally divorced went through a form of marriage in New York with Helen Stoepel (d.1887). The couple had two sons. He died in 1865 at Château de Bagen, Sauveterre de Comminges, Haute Garonne, but was buried in Kensal Green, London.