Wallace, a former US college basketballer from North Carolina, joined North Melbourne in December 2012 after a 10-day trial at Arden Street.
The 25-year-old's existing two-year deal was set to expire at the end of this season but he will now remain on North's rookie list in 2015.
Wallace spent his first season at North playing with VFL affiliate North Ballarat's reserves team, but this year has stepped up as the No. 1 ruckman in the Roosters' senior side.
In 14 VFL games this year, Wallace is averaging 34 hit-outs and has kicked six goals.
Wallace told NMFC.com.au on Monday he was delighted to remain at North in 2015.
"I've worked really hard over the last two seasons. (I have been) in and out of the offices with the development coaches, talking to the leaders of the team and trying to get better every day," Wallace said.
"The first day (at the club) I planned on playing the AFL next day – that's how confident I am – but here it is two years later in a position where I've put pen to paper and will come back for another year and have a good shot at it."
Wallace felt he had carved a niche for himself with North Ballarat this season but was mindful he still had to improve to achieve his ultimate goal of breaking into the AFL.
"There's still some things I need to get better at so I can play at AFL level … just the conditioning component, the endurance, the stamina," Wallace said.
"Then it's just the flow of game, being in the right position, being a dominant force as a ruckman or a full-forward, wherever Brad (Scott) needs me to come in as a player.
"I'm just learning and really getting the trust in my players that I can play my role the right way."
