On the 1883 map of the town site is the name of the surveyor, John Herbert Wallace. It has been widely assumed that he is the one the town is named after. However, according to historian Sal Manna in the July 2006 issue of Las Calaveras, the quarterly magazine of the Calaveras County Historical Society, the town is named for John Herbert Wallace's father, John Wallace, who was a well-known engineer and surveyor in the area. He had been elected San Joaquin County surveyor. John Wallace was also an elder brother of Alfred Russel Wallace, a leading 19th century British naturalist who independently developed a theory of natural selection around the same time as Charles Darwin. John Wallace had originally come to California for the California Gold Rush, but was unsuccessful as a miner.
According to the United States Census Bureau, the CDP has a total area of 4.3 square miles (11.2 km²), of which, 4.2 square miles (11.0 km²) of it is land and 0.1 square miles (0.2 km²) of it (2.08%) is water.
As of the census of 2000, there were 220 people, 87 households, and 68 families residing in the CDP. The population density was 51.9 people per square mile (20.0/km²). There were 96 housing units at an average density of 22.6/sq mi (8.7/km²). The racial makeup of the CDP was 90.00% White, 1.36% Black or African American, 0.45% Native American, 2.27% Asian, 0.91% from other races, and 5.00% from two or more races. 4.09% of the population were Hispanic or Latino of any race.
There were 87 households out of which 27.6% had children under the age of 18 living with them, 64.4% were married couples living together, 6.9% had a female householder with no husband present, and 21.8% were non-families. 11.5% of all households were made up of individuals and 4.6% had someone living alone who was 65 years of age or older. The average household size was 2.53 and the average family size was 2.74.
In the CDP the population was spread out with 22.3% under the age of 18, 4.1% from 18 to 24, 22.3% from 25 to 44, 36.8% from 45 to 64, and 14.5% who were 65 years of age or older. The median age was 46 years. For every 100 females there were 111.5 males. For every 100 females age 18 and over, there were 94.3 males.
The median income for a household in the CDP was $66,607, and the median income for a family was $70,568. Males had a median income of $51,058 versus $22,308 for females. The per capita income for the CDP was $26,895. None of the population or families were below the poverty line.
In the state legislature Wallace is located in the 1st Senate District, represented by Republican Dave Cox, and in the 25th Assembly District, represented by Republican Tom Berryhill. Federally, Wallace is located in California's 3rd congressional district, which has a Cook PVI of R +7 and is represented by Republican Dan Lungren.