For Halloween II, John Carpenter (who was producing) initially offered directorial responsibilities to Wallace.

After careful deliberation, Wallace declined, citing disappointment with the script (the job eventually went to Rick Rosenthal).

He did, however, agree to write and direct the third film in the franchise, Halloween III: Season of the Witch, which was the first and only one to deviate from the Michael Myers storyline (Wallace's voice was also featured as the announcer and the munchkin singers in the "Silver Shamrock" commercial).

Notable work includes writing the screenplay for 1982's Amityville II: The Possession; co-writing and directing 1988's Fright Night Part 2 starring Roddy McDowell; and adapting and directing the 1990 television miniseries adaptation of Stephen King's epic horror novel It.

Wallace's work in television was varied, including directing episodes of the cult TV series Max Headroom; the 1980s revival of The Twilight Zone; and Baywatch.