He begins his tenure on Monday 1 August, broadcasting on weekdays from 6.30am to 10am.
Berry left the show earlier in the year to take over the weekend 9am-1pm slot on 95.8 Capital FM, Global Radio's sister station.
Wallace said: "I've been a fan of Xfm for as long as it's been going and to get the breakfast show gig is a dream come true. Its listeners are smart and funny, its music cutting-edge, and its logo light green – the three most important elements of successful breakfast broadcasting."
Andy Ashton, Xfm's programme director, said: "Danny's intelligence, humour and passion for music make him the perfect match for our audience. His achievements so far are incredible and we can't wait to build on that with the launch of the brand-new show."
Wallace is the author of several bestselling books including 'Join Me' and 'Friends Like These' and has contributed to movies and television shows.
His novel 'Yes Man' has been adapted for the big-screen with comedian Jim Carrey in the lead role, and the screenplay for 'Friends Like These' is currently in production.
Wallace will join a long list of Xfm breakfast show presenters including 'Culture Show' host Lauren Laverne and Christian O'Connell, who now presents the breakfast show on rival station Absolute.
According to the latest quarterly figures from radio industry measurement body Rajar, Xfm attracts an audience of almost one million each week.