Wallace won the last of his six caps in last May's 5-1 defeat by the USA, before Rangers were consigned to liquidation and re-emerged as a new company in the bottom tier of Scottish football.
Levein only picked a Rangers player once in subsequent squads, and Ian Black's late call-up for the friendly win over Australia was down to the unavailability of several midfielders.
But Strachan saw no reason to exclude Wallace from a 28-man pool ahead of his first match in charge, the friendly against Estonia at Pittodrie next Wednesday.
Wallace is in ahead of Southampton's Danny Fox, who started the last two World Cup qualifiers, and former Ibrox team-mate Steven Whittaker, who has just shaken off a hip injury but has not played since December 22.
Strachan, who also recalled Chris Burke and Ross McCormack, revealed the decision, as with others, had been taken in consultation with assistants Mark McGhee and Stuart McCall, and scouting staff.
Strachan said: "He is in the Third Division but can still be a good player.
"Lee's been in the squad many times and played and he's been a good player.
"I see no reason why he's still not a good player.
"They all play in different leagues, some in the Premiership, some in the Championship, some in the Scottish Premier. I can't differentiate.
"Lee Wallace was in the squad before he went to the Third Division and he was good enough then, so I don't see any difference now."
Wallace himself argued he was still being tested every week.
The 25-year-old told his club's official website: "I think it was Lee (McCulloch) that said a few weeks ago that there isn't that much of a difference between the Third Division and the SPL and I'm with him on that.
"In all these games we are playing, either home or away, the opposition are raising their game and we've got to be at it.
"There's a massive expectancy on Rangers to win games and that's the same in the Third Division.
"So it's up to me to show that, if the manager gives me a chance to play for Scotland, I am ready for it and I definitely feel I am."
The former Hearts player added: "I'm obviously delighted to be selected and hopefully that is down to the new manager showing a bit of faith in me.
"I've never met him but I know all about him from his time at Celtic and having spoken to the Celtic boys in previous Scotland squads I was involved in they spoke very highly of him.
"He has great intelligence about football and knows a lot about the game, I think it's a great appointment."
Burke has only two Scotland caps, both gained in Scotland's successful Kirin Cup adventure in 2006, when he scored twice in a 5-1 victory over Bulgaria.
The 29-year-old has been the subject of several bids from Alex McLeish's Nottingham Forest this month.
Strachan said: "I spend a lot of time in the Midlands and I see a lot of Birmingham. And with my media work with ITV last year we did a lot of the Europa League and Chris was fantastic in the Europa League at a good level.
"He has a maturity about his play now and is adding goals.
"In the international set-up you need to be able to beat people by passes or eliminating them by going past them.
"He can certainly do the second part and is getting better at the first.
"In today's game when defences are so good, you need people like that."
Strachan also spoke highly of McCormack's ability to make chances for himself and revealed his goal and all-round performance when Leeds beat Tottenham in the FA Cup on Sunday had secured his place.
Another winger, James Forrest, has been included after Strachan was told he will have recovered from the hamstring injury that has kept him out in recent weeks.
And the former Celtic manager revealed he had been given Neil Lennon's blessing to pick four of his players - Forrest, Charlie Mulgrew, Kris Commons and Scott Brown - for a friendly six days before the Hoops host Juventus in the Champions League last 16.
Strachan said: "I have had a word with Neil, I got in there first.
"It's quite simple, he said: 'Pick as many of my players as you want, I trust you, you know what you are doing and know you will do the best for Scotland and Celtic'.
"Because I think we all agree that the better Celtic do, the better for the whole of Scottish football.
"The wellbeing of these players will be entrusted to me."
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