The 21-year-old, who recently won the club’s Young Player of the Year award, was arrested at Lava and Ignite nightclub in the capital’s West Tollcross in the early hours of Monday morning.
It is claimed that the footballer threatened to shoot staff and refused to leave the establishment.
Wallace is also charged with shouting and swearing, acting in a disorderly manner and breaching the peace at the club.
The left-back is also alleged to have become aggressive while being transported to St Leonard’s Police Station and is claimed to have threatened police both in a police car and at the police station.
Wallace appeared from custody at Edinburgh Sheriff Court facing a total of three charges of breach of the peace.
He denied the charges and was bailed with the special condition that he does not return to Lava and Ignite.
Wallace, of Carrick Knowe Parkway, Edinburgh, will return for his trial in October.
The 6ft 1in defender has recently signed an extension on his Tynecastle contract with Hearts that keeps him tied to the club until 2012.
He had also been hotly tipped for a call-up to the international scene, under his former Hearts boss George Burley, after starring at U19, U20 and most recently U21 level.
Wallace joined Hearts in 2004 from Salveson Boys Club after leaving Forrester High School and was voted Hearts Young Player of the Year only a few weeks ago at a dinner in Gorgie.
Last season he made 35 league appearances – including Sunday’s draw with Celtic at Parkhead.
Wallace has now been banned by the nightclub involved.
Bill McGregor, who runs Lava Ignite, said Wallace was refused entry at around 1am on Monday morning and police were called.
Mr McGregor who is also chairman of Unight – a network of pubs and nightclubs in Edinburgh – said he will also look for Wallace to banned across the capital.
He said: “He was refused admission because some of the party he was with did not have ID.
“He did not like it and used some abusive language towards door staff and management and I called to police who were 10 yards away. They were there in seconds.
“He was treated in the same was as every body else. We have a very strict ID and door policy and turn away several people every night.
“He will be banned from Lava and Ignite for six months and I will be banning him from Unite.”
He added: “Anyone who is abusive or uses abusive language to our staff will be subject to a ban.”
A club spokesman said: “We have been made aware of an alleged incident involving one of our players.
“The club is carrying out its own full internal inquiry and will be speaking to the player concerned as part of that investigation.”