It was Wallace's 55th career victory, seventh at the .526-mile track and first anywhere since California in 2001.
"That was a long streak, we finally broke that losing streak," said Wallace, the 1989 series champion. "It's about time. Damn, that's great. It's a wonderful feeling. It's a good run for us."
In a race delayed over an hour to repair a pothole, Wallace's Dodge Intrepid finished .538 seconds ahead of Labonte, who drove a Chevrolet Monte Carlo. The winner averaged just 68.169 miles per hour in a race that featured 10 lead changes among six drivers.
Wallace celebrated his victory by driving around the track backwards, waving out the window.
"Where's victory lane? It's been so long," Wallace asked.
"Good job, rubberhead," crew chief Larry Carter radioed to Wallace on his victory lap.
There was a red-flag stoppage lasting 77 minutes on lap 302 when a large chunk of concrete broke loose from the track in the third turn and hit the right front of pole-winner Jeff Gordon's Chevrolet while he was running second. Track crews patched it with a quick dry sealant to a square-foot hole three inches deep.
Gordon would to 22nd in the field but rallied back to finish sixth after the damage.
When the race restarted, Earnhardt led Jamie McMurray, Sterling Marlin and Wallace, who stayed within striking distance of the top five before the closing stages. He passed Earnhardt for third 74 laps from the finish and overtook teammate Ryan Newman for second on lap 447.
Wallace passed Jimmie Johnson for the lead on lap 455, just seconds before a three-car spin involving Joe Nemechek, Ricky Craven and Kevin Harvick in the second turn brought out the final yellow flag. The green flag waved on lap 463, and Wallace stayed in front.
"I'm so glad to win again. Man, it's been so long," Wallace said. "This win is for the fans. We finally got this Dodge into victory lane like it deserved."
It was Labonte's second runner-up finish this season. Earnhardt was third, followed by Johnson and Newman.
"The guys made some good pit stops toward the end of the day and got us some good track position," Labonte said. "We had a good car but not quite good enough at the end to catch him and pass him."
Jimmy Johnson stayed out while other decided to pit for new tires. That decision would come back and haunt him when he was unable to hold off the cars with newer tires. Johnson finished fourth.
Ryan Newman who finished fifth provided the sell out crowd some exciting racing when he and Jeff Gordon raced side by side for several laps with Newman eventually holding off Gordon for the position.
The race was slowed 11 times for 106 laps by caution, including the six laps before and the 11 laps after the repairs to the track were made.