The 19-year-old made his senior debut at Fluminense and signed for Chelsea earlier this year before being loaned back to the Brazilian club.
Wallace impressed on Chelsea's pre-season tour to Asia but with chances of a work permit in England remote, Blues boss Jose Mourinho was keen to loan him out in Europe for further experience.
Mourinho's former club Inter have taken up the option.
An announcement on their official website, www.inter.it, read: "FC Internazionale welcomes Wallace Oliviera dos Santos to the club.
"The paperwork on the Brazilian defender's loan move to Inter from Chelsea has been completed and the documents submitted to the Lega Serie A."
Chelsea later confirmed Wallace's move to Italy on their official website.