Wallace was born at Brampton in 1768, the son of James Wallace (1729–1783), a barrister who served as Solicitor General for England and Wales and as Attorney General to George III, and his wife, Elizabeth Simpson, the only daughter and sole heiress of Thomas Simpson Esq., of Carleton Hall, Cumberland.

Following the death of his father in 1783, he inherited (at age 15) Carleton Hall, which lies near Penrith, Cumbria.

He was appointed a Privy Counsellor in 1801[2] and ennobled as Baron Wallace, of Knaresdale in the County of Northumberland, on 2 February 1828.

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