Wallace, 24, started a 10-day trial with the Kangaroos last week and will be aiming to be the first person from the United States to play senior AFL football.
North Melbourne coach Brad Scott said it was an exciting opportunity for the Kangaroos and for Wallace.
"Eric is driven and keen to make a success of this," Scott said.
"It's really exciting for us to see just how far we can take Eric.
"At the moment he's got the physical attributes to play multiple positions."
Scott declared the North Melbourne playing list was delighted to have the big American join the Kangaroos.
Four months ago, Wallace had never heard of AFL football but he was one of 10 international prospects invited to the league draft combine after showing potential in American camp.
"I'm just grateful for the opportunity, it's about being part of the team," Wallace said.
Wallace, who is 197cm and 105kg, had stints at three colleges in five years, the last at Seattle University and had considered moving to Europe to play basketball before the AFL opportunity arose.
"I didn't know the rules, I was confused," Wallace told cbssports.com.
"I'm really falling in love with the game, getting addicted.
"More than I could have ever imagined.
"I was going hard right. But then the AFL approached me and I decided to take a step to the left. It's not basketball, but it's still being a professional athlete."
Scott and the Kangaroos used a 10-day trial to assess Wallace's skill levels and attributes, before signing him up.
"Eric's got some terrific athletic potential with his size, power, speed and agility, all those things are fantastic," Scott told AFL.com.au last week.
"The primary thing we are looking for is we really just want to see Eric as a person.
"We saw Eric at the (draft) combine and we're right across his athletic testing, but really we just want to get to know him personally so we can make an assessment as to whether he's going to fit the mould of our group and the culture of our club."
Wallace follows in the foot-steps of other North American AFL recruits such as former Collingwood ruckman Shae McNamara and Sydney Swans premiership winning ruckman Mike Pyke.
McNamara spent three years on the Pies rookie list unable to break into the senior team, but did play one 2011 NAB cup match.
Wallace has described Pyke's journey from professional Canadian rugby player to AFL grand final winner as an "inspiring story".