Having held a five shot lead at the halfway stage and gone into the final round three clear, Wallace saw his advantage reduced to a single stroke by first German, Sebastian Heisele, and then American, Julian Suri.
But the 27-year-old Englishman found birdies at key times and produced a third blemish-free round of the week to sign for a closing 69 and 19 under par total.
That was three better than Suri, who rattled in nine birdies in his first 15 holes only to ease the pressure on Wallace slightly when he dropped his only shot of the day at the 17th.
France’s Matthieu Pavon was third on 16 under, with Heisele and England’s Sam Walker a shot further back in fourth.
Wallace won six times on the Alps Tour last season - five of those victories coming in a row - to secure a place on the Challenge Tour.
However, he now finds himself in possession of a European Tour card after maintaining the winning habit in only his fourth event at this level.
“It’s the best feeling ever,” he said. “It’s always been a dream to win on the European Tour.
“Those first two days were really easy, that third day was the hardest day of my life and today was tough but it’s so satisfying and I’m really happy.
“A good friend of mine, Tom Lewis, won here in Portugal and I spoke to him yesterday and he has great memories here and I’m going to as well.”
After a sedate start featuring six straight pars, Wallace made gains at the seventh and ninth to keep his nose in front.
However, with Suri looming, it was a five iron third to tap-in distance following a poor drive at the par-five 13th that set up a birdie to send him two clear again, and another gain at the 16th sealed victory in style.
“That was the turning point where I thought ‘right, I’ve got this’,” Wallace said of his approach to the 13th.
“I didn’t see it coming, I never envisioned standing here, I just tried to go through my processes and work as hard as I could to be standing here today.
“I’ll have a few beers.”