The Cyclones (6-1, 3-0 Big 12 North) were idle last week and were playing for the first time since an emotional victory over Nebraska two weeks ago. Iowa State started sluggishly and the game was tied at halftime, 3-3, before Wallace took over.
Wallace was 15 of 22 for 148 yards and won his shootout battle with the Red Raiders' Kliff Kingsbury, who completed 37 of 50 passes for 272 yards.
Wallace brought the crowd to its feet in the third quarter when he cut across the field, evaded several tacklers and received a crushing block before dancing into the end zone to give the Cyclones a 10-3 lead.
Texas Tech (4-3, 1-1 South) tied the game on a one-yard touchdown run by Kingsbury with 6:23 left in the quarter before the Cyclones answered quickly.
Flanker Lane Danielson took a handoff on a reverse and raced 75 yards up the left sideline to give the Cyclones the lead for good at 17-10.
Michael Wagner scored on a three-yard run with 1:50 late in the third quarter and Wallace lofted a 20-yard touchdown to Lance Young in the corner of the end zone with 5:51 left to give the Cyclones a 31-17 lead.
The Cyclones have won six straight games after a season-opening loss to Florida State, but maintaining the streak will not be easy. Iowa State is at Oklahoma and Texas the next two weeks.
Iowa State set a school record by scoring at least 30 points in seven straight games.
The only scoring of the first half were field goals of 19 yards by Iowa State's Adam Benike and 37 yards by the Red Raiders' Robert Treece.
The Cyclones defeated the Red Raiders for the first time in five all-time meetings.