The 71-year-old, who has always denied his involvement in the murder, died of liver cancer.
"Although his freedom was much too brief, it meant the world to Herman to spend these last three days surrounded by the love of his family and friends," his defence team said.
"One of the final things that Herman said to us was, 'I am free. I am free.'"
Wallace is a member of the "Angola three," whose cases have drawn international attention because of the long stretches they spent in solitary after the 1972 death of prison guard Brent Miller.
They have always maintained their innocence and challenged the evidence that was presented against them.
The trio had embraced the Black Panther movement -- an African-American militant organisation -- while already serving time in prison for lesser crimes.
One of the three, Robert King, was freed in 2001. Wallace and his other co-defendant Albert Woodfox had stayed behind bars, confined to a tiny cell for 23 hours a day.
The state of Louisiana had refused to free him on medical grounds over his terminal cancer.
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