Wallace made the announcement on social media, posting, "We are building something special in Stillwater and I'm not ready to leave because this is where I belong."
The Fort Worth, Texas, native missed the final five games of the season after suffering the knee injury in practice on Oct. 30. He had surgery to repair the ACL on Nov. 6.
At the time of his injury, Wallace led all FBS players with a combined 2,394 receiving yards over the past two seasons. He caught 53 passes for 903 yards and eight touchdowns in eight games this season.
He has caught 146 passes for 20 touchdowns during his career at Oklahoma State.
The 6-foot, 185-pound junior was considered a top-20 prospect at his position, according to ESPN's NFL Draft Player Rankings.