Wallace grew up around motorsport: his father Russ Sr. was a prolific race winner, and all three brothers served on the family pit crew before graduating to competition themselves. Mike began racing on dirt tracks in the 1970s and eventually racked up more than 300 victories on short tracks across the Midwest. His daughter Chrissy and son Matt have also gone on to compete in NASCAR competition.
Wallace made his Busch Series debut in 1990 at Martinsville Speedway, starting 24th and finishing sixth. Through the early 1990s he bounced between teams, driving for Moroso Racing and Barry Owen among others. He posted a second-place finish at Martinsville in 1992 and logged nine top-tens in 1993 to finish twelfth in the final Busch Series standings.
In 1994, Wallace was hired by Junie Donlavey to drive the No. 90 Ford Thunderbird in the Winston Cup Series, competing in 22 of 31 races and finishing fifth in Rookie of the Year balloting. That same Busch Series season proved more fruitful: he won his first career race at Dover, then added victories at The Milwaukee Mile and Indianapolis Raceway Park.
Wallace's most consistent success came in the Camping World Truck Series. Driving for Ken Schrader Racing beginning in 1997, he finished in the top-ten in each of his final four races of that season. In 1999, driving the No. 2 Ford F-150 for Ultra Motorsports, he won in his first race for the team at Homestead-Miami Speedway and added another win six races later at Pikes Peak International Raceway, finishing sixth in points. He won two more Truck races in 2000 to move up to fourth in points.
In 2004, at the mid-season Daytona race, Wallace took the lead on the final lap and won his fourth career Truck Series race, his biggest win in the series and the first for team owner Biagi Brothers Racing.
Wallace returned to the Cup Series full-time with Ultra Motorsports in 2001, driving the No. 7 Ford. After Ultra folded mid-season, he joined Penske-Kranefuss Racing, where he drove the No. 12 Mobil 1 Ford alongside brother Rusty. At Phoenix, he led 45 laps late in the race and finished a career-best second, narrowly missing his first Cup victory. He ran for various teams in subsequent years, including Morgan-McClure Motorsports in 2004 and 2005 and Germain Racing in 2008, where he achieved a career-best eighth-place finish in the final points standings.
Wallace finished fourth in the 2007 Daytona 500, his best result in that race. In October 2009, he made history alongside his daughter Chrissy, who raced at Homestead in the Truck Series at the same time — the first time a father and daughter competed in the same NASCAR national series race. He also won the NCWTS Coca-Cola 250 at Talladega Superspeedway in 2011 after being pushed by Ron Hornaday for the majority of the race.
Wallace continued to make periodic NASCAR appearances through the mid-2010s, driving for various single-car and underfunded operations in Sprint Cup and Xfinity competition. He underwent triple-bypass heart surgery in April 2015. He was suspended indefinitely by NASCAR in September 2020 for a social media policy violation, later reinstated in March 2021. He returned to competition in 2025, founding the Carla Wallace Memorial Fund in honor of his wife Carla, who passed away in 2024 from ovarian cancer.