Wallace announced the surgery in an email sent Saturday to Grizzlies season-ticket holders.
"Mike has been extremely diligent as we pursued multiple different approaches to alleviate the pain before deciding surgery was the best solution," Wallace's email read.
Conley was able to work out in 3-on-3 scrimmages earlier in January, but his injury persisted. He is expected to make a full recovery ahead of training camp.
He has appeared in just 12 games this season, last playing on Nov. 13. He averaged 17.1 points and 4.1 assists per game.