Wallace, 21, joined Chelsea in the December of 2012 from Fluminense but remained with the club for the rest of the season before moving to Chelsea in 2013.
The versatile defender had work permit issues and had to be loaned in other to secure it. He was loaned to Inter Milan, Vitesse and most recently Carpi in the summer of last year.
However he has failed to shine for the newly promoted Seria A side and was reduced to second fiddle football. He managed to feature for Carpi six times in the Seria A and five of his cameos have been from the bench.
The report according to Esporte claims Gremio will make the announcement of the deal official tomorrow and the player will lace his boot for them until the end of the season.
Wallace can play across all positions on the defence line but will certainly find it difficult to break into the first team of Chelsea.