The extent of the injury is unclear.
"He complained about it during shootaround, and it carried over to the game, so we held him out," Knicks coach Mike Woodson said.
It is unclear if Wallace will be available for Sunday's game against Detoit.
Wallace had established himself as an important rotation piece for the 8-3 Knicks, averaging 7.5 points, 4.4 rebounds and one block in 15 minutes.
Kurt Thomas replaced Wallace in the rotation against Houston, pulling down just one rebound in 10 minutes as the Knicks gave up a season-high 131 points.
Marcus Camby is another candidate to replace Wallace, but Woodson said before the game that the veteran was still working on his conditioning.
Camby missed Knicks' training camp with a calf injury and had been slowly working his way into game shape.
"We haven't had a chance to practice. He's still doing his conditioning work every day," Woodson said before the game. "But it's different, to be able to get out on the practice floor as a unit and run up and down and do different things. It's totally different than just riding the stationary bike or running on a treadmill, so we've just got to keep pushing him."
Camby has played in just four games for New York, averaging three rebounds and 0.5 points in nine minutes.
Tyson Chandler also appeared to injure his left knee in the first half. He was grabbing at it and seemed to be limping, but he played the entire game and said afterward that his knee was fine.
"I'm OK. Just get a little treatment, should be fine," the Knicks center said.