He scored his first goal of the season against Reading at the Stadium of Light in a 2–1 victory for Sunderland, scoring again in a 3–2 loss to Arsenal scoring the first ever goal for Sunderland at their first ever game at the Emirates Stadium. Despite his impressive season, Roy Keane stated he would consider offers for Wallace. Wallace was linked with a MLS side Toronto want to sign him but talks never materialised. On 18 January 2008 it was reported that Wallace had sustained an Anterior Cruciate Ligament knee injury and would therefore miss the rest of the 2007–08 football season. But in an unexpected turn of events, Wallace made his return on the final game of the season in a 1–0 loss against Arsenal.