The Montgomery (Ala.) Advertiser reported with more than 99 percent of the votes counted statewide, Strange had 54 percent of the vote and Wallace conceded the election late Tuesday night.
The acrimonious campaign saw Strange's campaign refer to Wallace as an "out of touch liberal" while Wallace took shots at Strange's lobbying for corporations. However, in conceding, Wallace called Strange "his friend," and wished him well, the newspaper said.
"I wish him the very best as they go forward and represent our party in November," Wallace said.
Wallace, the son of former Alabama Gov. George Wallace, previously lost bids for Congress and lieutenant governor.
Strange will face former governor and lieutenant governor Jim Folsom Jr. in November's general election.