Wallace was born in Indianapolis, Indiana, where her family ran an industrial supply business and raised her in the suburbs, she told People magazine. With a population of about 740,000 in 1970, "dancing at the Holiday Inn was the biggest thing in town," she joked.
When she was 14, her parents divorced and Wallace was already showing her wild side. Once she suddenly went on a 1,200-mile road trip with a friend to Miami, Florida. But her teen years also included typical high school pursuits, such as competitive swimming and cheerleading, according to the magazine. Men began to play a larger role in her life. At age 17, she moved in with a guitarist in the Indy rock band "Pure Funk."
"My mother always says that if I ever have a daughter, I deserve to have one like myself," she said in 1976.
Wallace also began traveling the 180 miles between Indianapolis and Chicago, to work as a model. A modeling agent pushed her to enter the Miss Indiana World and Miss World USA beauty pageants, which she won, opening the door to the 1973 Miss World contest in London.
On November 23, 1973, Wallace defeated 53 competitors at the Royal Albert Hall in London as the first American to be crowned Miss World.
During her time in the UK, she dated celebrities including Welsh singer Tom Jones, Northern Irish football star George Best, and American Indianapolis 500 and Formula One driver Peter Revson, with whom she was reportedly engaged to be married. During her engagement to Revson, she carried on an affair with Tom Jones, being seen kissing him on a beach in Barbados. This violated Wallace's Miss World contract, which prompted pageant authorities to take away her title on March 7, 1974, 104 days after she was crowned. Contest officials announced that Wallace "had failed to fulfill the basic requirements of the job."
First runner-up, Evangeline Pascual of the Philippines, was offered to fulfill the duties left by the winner (without the title and the crown) but refused. The second runner-up, Patsy Yuen of Jamaica, accepted the offer to complete the Miss World duties without being officially crowned as Miss World.
Fifteen days after Wallace was stripped of her crown, Peter Revson was killed in a fiery crash on March 22, 1974, while practicing for the South African Grand Prix in Johannesburg. He died en route to a hospital and was wearing a gold locket Wallace had given him bearing the engraving, "If not for you ..." Wallace attended Revson's closed-casket funeral at Manhattan's Unitarian Church of All Souls.
Less than three months later, Wallace was rushed to St. Vincent Indianapolis Hospital after her sister, Nancy, found her unconscious in her apartment, apparently from an overdose of the sleeping pill Doriden. A doctor stated that Wallace was "comatose, and in pretty bad shape." She was put on a dialysis machine to clear her kidneys.
Wallace's mother Alice stated, "She might have felt like she couldn't go on", however, Wallace herself said two years later, "I was depressed and OD'd on a few too many sleeping pills. I never attempted suicide."
Wallace won television acting roles on some of the top shows of the 1970s, including Baretta with Robert Blake and Get Christie Love! with Teresa Graves. She also appeared as a panelist on the television game show, Match Game.
By 1976, she moved into the Los Angeles apartment of tennis champion Jimmy Connors. "Marji (sic) and I don't even have to talk to each other if we don't feel like it," Connors reportedly said. "But I feel I have found someone to share the things I like, and that makes it all worthwhile." Connors, Wallace said, was "a fantastic person. A very different person off the court."
The relationship with the tennis star did not last long. After the breakup, Wallace moved to New York where she auditioned for television sportscasting positions with ABC and CBS. She also appeared in television commercials for Ultra Brite toothpaste, Wella products and American Express.
In the summer of 1977 she met film producer Michael Klein at a Beverly Hills party and they were married in May 1978. Klein's father was Eugene V. Klein, owner of the National Football League's San Diego Chargers. They had a son named Adam.
In 1981, she became one of the first co-anchors on the television show, Entertainment Tonight. A few months later, producers decided to make a change, offering her a reporter position on the program, which she declined.
In 1982, her marriage to Klein ended in divorce. Soon after, newspapers reported she was dating Richard Cohen, the estranged husband of Tina Sinatra. In 1994, she married real estate developer Donald Soffer; they divorced in 1996.