When he returned home to Minneapolis, he went to the public library each day for six month researching and condensing magazine articles. He created a mock up of a magazine with articles on a wide variety of subjects that were condensed for easy reading.
After he and Lila Bell Acheson were married in 1921, they decided to publish the magazine themselves and market it by direct mail. Their first issue was published in 1922. They hoped they make $5,000 a year profit on the venture. By 1929, the magazine had 290,000 subscribers and a gross income of $900,000 a year. Wallace proved to have a keen sense of what readers wanted in a mass-circulation magazine. He served as editor of the magazine until 1965.
Wallace was a staunch political and social conservative and the magazine's content reflected his anti-communist perspective. He and his wife contributed heavily to Richard Nixon's campaign for president in 1968, and in 1972 President Nixon presented them with the Presidential Medal of Freedom.
In 1950, the Wallaces' company began publishing hardcover anthology collections of condensed versions of best-selling novels (and sometimes nonfiction books) as Reader's Digest Condensed Books (now called Reader's Digest Select Editions). The books were distributed by direct mail. The first edition included work by Pulitzer Prize-winning playwright Elmer Rice, journalist Morton Thompson, South African anti-apartheid activist Alan Stewart Taton, and an autobiography of humorist Will Rogers, edited by Donald Day.
At it's zenith, Reader's Digest was the best-selling consumer magazine in the country, with a circulation of 8 million, though in 2011 it was cut to 5.5 million. It still reaches more well-to-do readers with household incomes of more than $100,000 than Fortune, The Wall Street Journal, Business Week and Inc. combined. Globally it reaches 40 million readers in more than 70 countries, with 49 editions in 21 languages.
The Wallaces were well-known philanthropists, establishing The Wallace Foundation to continue their charitable giving after their deaths in the early 1980s.