After graduating from Cambridge Wallace travelled to the United States, where he spent three years working towards his PhD at Cornell University, finishing his thesis on the Liberal Revival of 1955–66 while in residence at Nuffield College, Oxford.

[2] Wallace began his academic career as a lecturer in the Department of Government at the University of Manchester where he taught between 1966 and 1977.

From 1990 to 1995 Wallace was the Walter Hallstein Senior Research Fellow at St Antony's College, Oxford.

He is chair of the advisory board of LSE IDEAS, a centre for the study of international affairs, diplomacy and grand strategy.

[7] In April 2010, he courted controversy when he partially defended[8] Jenny Tonge, another Liberal Democrat peer following an interview she gave to the Jewish Chronicle in which she called for an investigation into claims of Israeli organ harvesting in Haiti.

In 1997 Wallace became a member of the Select Committee on the European Communities and chairman of the Sub-Committee on Justice and Home Affairs 1997–2000.

[12] Wallace is a trustee of the National Children's Choir; a member of Atlantic Community Advisory Board; chair of the Board of Voces Cantabiles (professional choir, not-for-profit musical and educational work); is vice president of the Upper Wharfedale Agricultural Society; and is a member and shareholder of the Wensleydale Railway Association.

In the past Wallace has served as a council member of the Royal Institute of International Affairs; a board member of Genius of the Violin; a chairman of the Academic Advisory Committee and a trustee of Goodenough College, London;[13] chair of the advisory board of the Cold War Studies Centre, London School of Economics; co-chair of the British-Dutch bilateral 'Appeldoorn' Conference; was patron of the Saltaire Festival; and was patron of the Shipley Glen Tramway.

[14] He lists swimming, singing, confusing students, walking (and pub lunches) in the Yorkshire Dales, and gardening as his hobbies and interests.