Alan John Bayard Wace was born in Cambridge on 13th of July 1879, the second son of Frederic C. Wace, fellow of St. John's College, Cambridge, and Fanny Wace (née Bayard). Alan attended Shrewsbury School, where he was head of school in 1898. He read Classics at Pembroke College, Cambridge (matriculated 1898), studying classical archaeology for part two of the Classical Tripos (1901), obtaining a First class with distinction (1902). A pupil of Sir William Ridgeway's and Charles Waldstein's, Wace's undergraduate contemporaries included Percy Ure and Richard Dawkins. With the latter he shared a deep interest in Greek textiles - the pair both developed their own important collections. Letters between Wace and Dawkins are held by the archives of Emmanuel College, Cambridge.

Wace held the Prendergast Studentship at the British School at Athens (1902-1903) and during that academic year studied Hellenistic sculpture, publishing Wace, A. (1903). Apollo seated on the Omphalos: A Statue at Alexandria. The Annual of the British School at Athens, 9, 211-242. This was followed by a Craven scholarship in 1903 which enabled Wace to spend autumns at the British School in Rome (BSR), to assist with Stuart-Jones's comprehensive survey of classical sculpture held in Rome's museums. In 1905-1906 Wace was appointed the BSR's librarian to support him whilst he catalogued for this project. Wace was also elected a Fellow of Pembroke College between 1904-1913.

Simultaneously, during the spring and summer of these years, Wace journeyed and excavated in Greece and visited archaeological sites in western Asia Minor and Egypt. He acted as Secretary on Professor E. Gardner's Island Cruise around the Aegean on the boat 'Pelops' (1903) and joined Gardner's cruise on the SS Peneios in 1904. During 1904-1905 he travelled around Lakonia, the Magnesian peninsula (Thessaly), Skiathos, Skopelos, Delos, Pergamon and Constantinople. He first excavated at Geraki (1905) and undertook a topographical survey of Lakonia, co-authoring Tod, M., & Wace, A. (1906). A catalogue of the Sparta museum. Oxford: The Clarendon press. Wace was part of the excavation team at Sparta from 1906 to 1909.

In 1906 he explored the Dodekanese islands with Richard Dawkins and in 1907 they visited the Cyclades. In 1906 Wace was short-listed for the BSA directorship - although the position went to Dawkins. From 1907, Wace began to excavate in Thessaly, first with John Percival Droop at Theotoku, after which they surveyed the landscape for prehistoric mounds. Together with Maurice Scott Thompson in 1908, he excavated at Zerelia, a site their field walking had identified the year before. In 1909 they excavated at Palaeomylos and Tzani Maghoula and in 1910 at Tsangli and Rachmani. This work led to Wace and Thompson's volume Prehistoric Thessaly, published in 1912. Wace and Thompson also studied the nomadic Vlachs, The Nomads of the Balkans: an account of Life and Customs among the Vlachs of Northern Pindus, 1914.

Wace took up a position as lecturer in ancient history and archaeology at the University of St Andrews in 1912. He held this position only briefly; upon Dawkins' resignation as director of the BSA in 1914, Wace was appointed to the role. Coinciding with the outbreak of World War I, British School excavations paused. During 1915–19 Wace was seconded to the British legation at Athens, directing relief for British refugees. In December 1916 he and the rest of the legation were evacuated to the British armed storeship the Abbasieh and spent that winter at sea.

Alongside the legation work, Wace joined Carl W. Blegen (1887–1971), of the American School of Classical Studies at Athens (ASCSA), on the ASCSA dig at the prehistoric site of Korakou, near Corinth (1915-1916). Blegen and Wace also spent time re-examining pottery from Mycenae excavations, stored in the Nauplion Museum. It was at this time that the two men, who remained close friends throughout their lives, published, Wace, A., & Blegen, C. (1918). The Pre-Mycenaean Pottery of the Mainland. The Annual of the British School at Athens, 22, 175-189, positing a mainland pottery sequence, which they dubbed 'Helladic', and arguing against 'Mycenaean' being a variant of the Minoan civilization.

In 1920, Wace began excavating at Mycenae having been granted permission by Christos Tsountas, on behalf of the Archaeological Society of Athens (ASA). Wace published his Mycenae excavations promptly and thoroughly in Wace, A. (1921). The Annual of the British School at Athens, 24, 185-209 and Wace, A. (1923). The Annual of the British School at Athens, 25, 1-434.

Alongside the Mycenae excavations, Wace had continued to participate in the work of the ASCS with Carl W. Blegen, this time at Zygouries, near Corinth(1921-1922). A natural storyteller, Wace would tell stories around the dinner table during excavations; a book of these tales was published posthumously in 1964: Greece Untrodden .

In 1924, after a period lecturing in North America at Princeton and the Archaeological Institute of America (1923-1924), Wace returned to England and was appointed deputy keeper in the Department of Textiles at the Victoria and Albert Museum. In June 1925 Wace married Helen 'Lottie' Pence (1892–1982), an American archaeologist who had been studying in Rome. The pair met at Mycenae in June 1922, during a side visit Helen made to Greece. In 1931 their daughter Elizabeth was born in London. Among the visitors was Carl Blegen, who gave Elizabeth the nickname Lisa.

In 1932, Wace, A. (1932). Chamber tombs at Mycenae (Archaeologia, or, Miscellaneous tracts relating to antiquity; v. 82). Oxford, completed the publiction of the 1920-1923 excavations. In 1933 Wace joined Blegen for excavations at Troy. In 1934 he was elected to the Laurence Chair of Classical Archaeology in Cambridge, a position he held until he retired in 1944. Upon his appointment to the Laurence Chair he was made a Fellow of Pembroke College and thereafter, an honorary Fellow from 1951.

Wace had returned to excavate at Mycenae in 1939, accompanied by his wife and daughter as well as three of his Cambridge students: Frank Stubbings, Vronwy Fisher and Helen Thomas. Further excavations were curtailed by World War II, with Helen and Lisa evacuated to America. Wace again worked for the British Legation, as well as helping to package objects in the Athens National Archaeological Museum. He was evacuated to Cairo in 1941 where in the Inter-services Liaison Department he prepared identity papers for British agents operating in Greece. In 1942 he was briefly evacuated to Jerusalem, where Harry Iliffe was Keeper of the Palestine Archaeological Museum.

Whilst resident in Egypt, Wace accepted the chair of Classics and Archaeology at the Farouk I University at Alexandria in 1944. In this year he co-curated an exhibition of Coptic art in Cairo with Étienne Drioton. During the tenure of this professorship he initiated excavations of Hellenistic Kom al-Dikka and investigated other sites, for which see Wace, A. (1959). Hermopolis Magna, Ashmunein: The Ptolemaic sanctuary and the basilica (Jāmiʻat al-Iskandarīyah. Kullīyat al-Ādāb. Publications; no. 8). Alexandria: Alexandria University Press.

After the war, Wace was a member of Princeton's Institute of Advanced Study in 1948, which enabled the publication of, Wace, A. (1949). Mycenae, an archaeological history and guide. Princeton: Princeton Univ. Press. He resumed his excavations at Mycenae in 1950, discovering Linear B tablets there in 1952. Leaving Alexandria in 1952, Wace took up residence in Cyprus and continued to excavate at Mycenae until 1955 and undertook study seasons in 1956 and 1957, interspersed with sojourns in Princeton (1951-1955).

On the 9th of November 1957 Alan Wace died in Athens at the age of 78. He is buried in the Protestant section of the First Cemetery in Athens. His former student Frank H. Stubbings completed Wace's Companion to Homer (1962), a work in preparation since 1939.