Owner Leonard Wood and drivers Cotton Owens, Herb Thomas and Buck Baker joined Wallace in the hall's fourth class.
Baker was tied with Fireball Roberts for the fifth spot after voting, so a second vote was held to determine the final position. NASCAR Chairman Brian France said it was the first time since the hall began that the panel had to break a tie.
Wallace, who was picked his first time as a finalist, won 55 Sprint Cup races in 706 starts and won the 1989 championship. He now works as a broadcaster.
The five men will be inducted in ceremonies at the NASCAR Hall of Fame in February.
Wallace said his first clue he might've become a Hall of Famer was when he was ushered to the front row moments before the ceremony. "I'm always one who's late to the party," he joked.
When Wallace's name came up, he was hugged by son Greg and one of his old crew chiefs, Robin Pemberton. Wallace is ninth on the Sprint Cup wins list and was a short-track master with 25 of his victories coming at Bristol, Martinsville, North Wilkesboro and Richmond.
"I'm just humbled, I really am," he said.
Wood joins his brother, Glen, who was picked for the hall last year. The Wood Brothers team was credited as pioneers of the modern pit stop. Leonard, alongside Glen and Delano Wood, was the team's chief mechanic. Leonard Wood won 96 races and 117 poles in 900 races as a crew chief.
Owens had success as a driver and owner in NASCAR. He won nine races in NASCAR's premier series and finished second for the 1959 championship to Hall of Famer Lee Petty. Owens later hired Hall of Fame drivers in Junior Johnson and David Pearson, winning 38 times as an owner.
Thomas, who died in 2000, is considered one of NASCAR's first superstars by winning championships in 1951 and 1953 and finishing second in 1952 and 1954.
Buck Baker became the first NASCAR driver to win consecutive championships in 1956 and 1957. He's 14th on the career list with 46 wins. Baker died in 2002.
The five were picked by a panel of 54 in what France said was the most difficult selection since voting began.
Thomas and Leonard Wood each got 57 percent of the vote with Wallace receiving 52 percent and Owens 50 percent.
Baker and Roberts each received 39 percent of the ballots, requiring overtime to break the tie.
The five came from a pool of 25 nominees selected last month.
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