The 24-year-old, signed in January for the rest of the season from Sheffield United, was injured in the 2-1 home defeat by Southend on 2 February.
"We've seen what a talent the lad is," Town boss Micky Mellon told BBC Sport.
"But he goes in for a tackle and he's picked up an injury."
Mellon added: "He's gutted as he came here to play and to get himself going again."
Wallace, who came on as substitute in Town's fourth round win over Sheffield Wednesday, has been limited by injuries to just 20 appearances for the Blades since signing from Tranmere Rovers in June 2014.
The former Everton trainee is on his second loan at Shrewsbury, having spent two months on loan in Shropshire during the 2011-12 season when he was still on the books at Goodison Park.
Shrewsbury have won just once in six league matches since the turn of the year, going into Saturday's key away game against fellow strugglers Blackpool, one of Town manager Micky Mellon's former clubs.
Mellon has the option of bringing in Elliot Grandin for his debut against his former club, the former Blackpool winger having signed last week until the end of the season.
It is the final time Shrewsbury will be in action before the meeting with Louis van Gaal's United.
The League One club have so far sold 6,000 tickets for their tie against the 11-times FA Cup winners on Monday, 22 February (19:45 GMT).

Its resolution laid the blame at the door of bodyguards working for Turkey's President Recep Tayyip Erdogan, saying they had beaten up Kurdish protesters.
The Turkish embassy previously said the demonstrators had aggressively provoked Turkish-Americans gathering to greet the president, who was visiting the US.
Eleven people were injured.
Videos of the incident appear to show Turkish security officials punching and kicking unarmed Kurdish demonstrators.
"Any Turkish security officials who directed, oversaw, or participated in efforts by Turkish security forces to illegally suppress peaceful protests... should be charged and prosecuted under United States law," the resolution states.
Turkey has demanded a full investigation.
House speaker Paul Ryan urged the Turkish government in Ankara to "finally accept responsibility for this egregious incident and apologise to those who were harmed".
On-loan Shrewsbury Town midfielder James Wallace has been forced out of action with a knee injury that will cause him to miss the FA Cup fifth-round tie with Manchester United.
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The Congress has called for criminal charges against those involved in a brawl outside the Turkish ambassador's residence in Washington DC last month.