The 2008 Beijing gold medallist went one better than the bronze he won at the first World Cup in Milan claiming the silver medal behind Czech giant Josef Dostal.
Wallace finished 0.898 seconds behind the Czech who triumphed in 1:35.892.
A second Australian, 19 year old Jordan Wood featured in his first World Cup A final placing eighth, 3.704 seconds behind Dostal.
Wallace said he has a real love hate relationship with the non-Olympic event.
“I know it is always going to hurt and those last 100 metres is going to be a real sting but it is good to get through it. It is always good to be on the podium,” Wallace said.
The 30 year old said he felt like a middleweight boxer up against the heavyweights of Dostal and bronze medallist Max Hoff.
Despite flying home in the latter stages of the final Wallace fell short of Dostal who had a strong middle section of the race.
“It was too much to try and catch. I think I was slowly reeling him in but not enough,” Wallace said.
Both Wallace and Wood will contest the K1 5000 event at 11:15pm AEST tonight.
Western Australian Olympic pair Jesse Phillips and Stephen Bird finished ninth in the K2 200 A final.
It was a solid result for the pair in their first World Cup hit out of the season.
They finished 1.730 seconds behind German crew Ronald Rauche and Tom Liebscher who won the gold in 31.440 ahead of Russia and France.
Australia has traditionally struggled in the shorter mens race distance prior to the last couple years and they are slowly starting to gain ground on the strong European nations.
Lachlan Tame secured himself a berth in the K1 200 at the senior World Championships when he took out the K1 200 B final.
Tame recorded a time of 36.505 to hold of German Jonas Ems by a mere 0.056 seconds.
Fellow Australian Brodie Holmes of Perth finished third in 36.982.
“It was alright. I was under a bit of pressure because the German and I both broke so we had a warning, then had to really wait for the start and nailed it first stroke so I had a good race,” Tame said.
Holmes who is competing at his first World Cup series this year was pleased with his performance.
“The race was alright. I got left in the gate a little bit at the start but I finished pretty strong so I am happy,” Holmes said.
Earlier in the day NSWIS kayaker Jo Brigden-Jones recovered from a tough day of racing on Saturday to win the women’s K1 200 B Final in 42.178.
There is still one race remaining for the Australians at the second World Cup, with Ken Wallace looking to make it consecutive gold medals in the K1 5000 event.