In the late '70s, prior to joining the NASCAR circuit, Wallace made a name for himself racing around the Midwest winning a pair of local track championships. Rusty won more than 200 short track races. In 1979 he won United States Auto Club's (USAC) Stock Car Rookie of the Year honors, behind A.J. Foyt and Bay Darnell.[2] He finished second in USAC Stock Car in 1981 behind Joe Ruttman.[2]

In 1983 he won the American Speed Association (ASA) championship while competing against some of NASCAR's future stars like Mark Martin, 1992 NASCAR Champion Alan Kulwicki and Dick Trickle.