The 22-year-old has signed a three year deal at Molineux, for a fee reported to be in the region of £275,000.
Wallace had an impressive season for the Sky Bet League Two club, despite his side only finishing in mid-table.
He told wolves.co.uk: “Portsmouth are an important club to me and they gave me my chance in football.
“I don’t think you can ever forget things like that.
‘For me now I am desperate to prove myself at a higher level.”
Wallace later told his new club in his first interview that he expects the Wolves fans to be similar to those at his previous club.
He said: “I am used to passionate supporters, being at Portsmouth.
“I spoke to people who have played at Wolves and they have said that it feels like a big club and Molineux feels like a big arena when you get there to play football.”
Wolverhampton Wanderers boss Kenny Jackett will be hoping that Wallace can aid the club’s push for promotion next season, after the Midlands club narrowly missed out on a play-off spot this season.
Wolves fans…What do you make of this news? Are you excited by the prospect of Jed Wallace? Portsmouth fans…Are you disappointed to see him leave? Please comment below.