Wallace was born in Portland, Indiana. He is of Scottish ancestry, and he trained in wrestling during his high school years. He began his study of Judo in 1966 and was forced to discontinue his Judo related activities because of an injury he suffered to his right knee during practice. He then began to study Shōrin-ryū Karate under Michael Gneck in February 1967 while serving in the U.S. Air Force.  After entering the point fighting tournament scene and achieving success there, he switched to full-contact competition.

Wallace studied at Ball State University, earning a bachelor’s degree in 1971 in physical education. In 1976, he earned a master’s degree in kinesiology from Memphis State University.

With the coaching help of veteran fighter Jim ‘Ronin’ Harrison, Wallace won 23 consecutive professional fights between 1974 and 1980, becoming the Professional Karate Association middleweight world full-contact karate champion and retiring undefeated. Due to his Shōrin-ryū style, Wallace adopted a bladed, or sideways, stance with his lead arm held low in a manner similar to crab style boxers. He was known for his fast left leg kicks, especially his roundhouse kick and his hook kick, which was clocked at about 60 mph. He focused on his left leg because of the Judo-related injury to his right knee, using the right leg primarily as a base. He also was kicked in the groin during a point fighting tournament and suffered the loss of one testicle.

A year later, Wallace turned professional and captured the PKA middleweight karate championship with a second-round knockout. He relinquished the crown in 1980, undefeated. The PKA promoted the sport of full-contact karate. Full-contact karate differed from kickboxing in that leg kicks were allowed in kickboxing and forbidden in full-contact karate. It was PKA President, Don Quine, who coined the phrase “Superfoot” to describe Wallace after witnessing his fight first with Mark Georgantas and then with Jem Echollas.

Bill Wallace was a personal trainer and close friend of both Elvis Presley and John Belushi. On March 5, 1982, Bill Wallace found John Belushi dead of a cocaine and heroin overdose, in his room in Bungalow 3, at the Chateau Marmont, on Sunset Boulevard, in Hollywood, California.

In 1990 Bill Wallace (166 lbs) fought one last exhibition kickboxing/karate match with friend Joe Lewis (198 lbs) on pay per view. Both Wallace and Lewis were refused a boxing license because of their age. The exhibition ended with one judge in favor of Wallace and the other two judges scored the bout a tie; ending the exhibition in a draw.