Born in Tennessee, Wallace spent part of his childhood there and in Virginia. He began writing stories at the age of seven and by the time he graduated from high school. Instead of pursuing a career as a screenwriter or author, however, Wallace planned on becoming a minister or a songwriter.
Wallace graduated from E.C. Glass High School in Lynchburg, Virginia and attended Duke University, where he was a seminary student. In interviews he has acknowledged a deep commitment to Christianity, which he credits as an influence on his approach to filmmaking.
In 1980, Wallace moved to Hollywood after trying out a career in singing and songwriting. He soon began writing short stories, novels and scripts for movies and television shows.
Wallace holds a black belt in Karate.