Wallace was born at 204 Durants Road, Enfield, North London, to James, a telecommunications engineer, and Annette, a secretary. Her parents divorced when she was aged three and, unusually, she and her sister were raised by their father (however, she did see her mother at weekends).She adopted her stage name after her late grandmother.
After schooling, Wallace trained as a make-up artist at the College of North East London in Tottenham and worked at the Royal Shakespeare Company for two years. She met and became friends with actor Iain Glen, who helped her apply for London drama college The Poor School, from where she graduated in 1999. While undertaking auditions - including for Andrew Lloyd Webber's Sunset Boulevard, she worked as a real life barmaid at her local pub, The Royal Oak in Loughton, Essex.
Her first television appearance was in an episode of the ITV police drama series The Bill in 1999. Wallace is best known for playing the role of Kat Slater in BBC One soap opera EastEnders between 2000 and 2005. In Summer 2008, Wallace said she hadn't ruled out a return to EastEnders. In February 2010 it was announced that Shane Richie was returning as Alfie Moon, leading to large amounts of speculation as to whether Jessie would also be returning. On the 9th February 2010 the BBC confirmed that Jessie Wallace would be returning to EastEnders, reprising her role as Kat Slater. She and Alfie returned to screens in the Autumn of 2010.
During her break from EastEnders, Wallace made television guest appearances, including once as Kat Slater, in the 2005 French & Saunders Christmas special. On 17 February 2006, Wallace was the "guest host" of an edition of the Channel 4 programme The Friday Night Project. She appeared in the one-off BBC1 television dramas A Class Apart opposite Nathaniel Parker, The Dinner Party with Lee Evans and Alison Steadman. After visiting Hat Trick Productionswith her agent, and singing an impromptu version of Marie Lloyd's song The Boy I Love Is Up in the Gallery, she was offered the lead role in Miss Marie Lloyd - Queen of The Music Hall for BBC Four.
Wallace made her West End theatre debut, replacing Denise van Outen in the role of "Maureen" in Rent remixed at the Duke of York's Theatre from 27 December 2007 until 2 February 2008. Wallace played Amy Kriel in the third series of ITV1's Wild at Heart, and starred in a run of the play Haunted at the Arts Theatre from 24 May.
Wallace appeared as British sex symbol of the 1960s and 70s Pat Phoenix, in The Road to Coronation Street, a one-off documentary exploring the origins and conception of Coronation Street, to mark the show's 50th anniversary in December 2010.
Wallace is a patron of the theatre charity The Music Hall Guild of Great Britain and America.