A joint statement from British Swimming and Scottish Swimming confirmed the 24-year-old will be banned from activity until September 12 for violating the athlete code of conduct.
The Scot, who is based at the University of Stirling, will therefore not be eligible for next month's World Championships in Budapest.
He is expected to plead guilty to the offence when he appears in court.
Wallace said in the statement: "It is with much regret that I was found to be driving under the influence of alcohol.
"Not only have I let myself, my family and team-mates down, I have put others at risk and I am profoundly sorry for my actions. I recognise that I am in a position of influence and this type of behaviour is not acceptable in any way, shape or form.
"I am now looking to rebuild trust in everyone who has supported me and put their faith in me, and will do whatever it takes to come through this a better, stronger person. I am deeply sorry."
The statement added that Wallace had "signed a letter of intent outlining his commitment to work with the necessary support systems provided and reaffirming his responsibility to British Swimming, Scottish Swimming and the University of Stirling as an athlete".
British Swimming national performance director Chris Spice and Scottish Swimming director of performance Ally Whike, in a joint statement, said: "This is clearly unacceptable behaviour from Dan and we are disappointed by his actions.
"Dan has publicly acknowledged the seriousness of his mistake and is accepting of the consequences that must follow. Together, we will now support him through this difficult period to try to get this young and talented man back on track."
Wallace won a silver medal as a member of the 4x200metres freestyle relay team at the Olympics in Rio last summer. He won gold in the same event at the 2015 World Championships.
He also made headlines at the Commonwealth Games in Glasgow in 2014, shouting "for freedom" after winning the 400m individual medley. He later clarified he was merely quoting a line from the film Braveheart and not commenting on the upcoming Scottish independence referendum.
