Diminutive of Walter ('ruler of the army') or Wallace ('foreigner, Welshman').
Wally has two possible parent names, each with its own distinguished lineage. As a diminutive of Walter — from the Old High German "Walther," composed of "wald" (rule, power) and "heri" (army, warrior) — it carries the heritage of a name that was royal and aristocratic across medieval Europe, borne by Walter Raleigh, Walter Scott, and a long line of noblemen. As a shortening of Wallace, it connects to the Old French "waleis" (foreigner, Welshman), a surname that became a given name largely in honor of William Wallace, the thirteenth-century Scottish independence leader whose story was already being romanticized into legend by the time surnames began crossing into first-name use.
In twentieth-century America, Wally acquired a particular cultural texture — warm, accessible, slightly boyish, the name of a pal rather than a grandee. Wally Schirra was one of the original Mercury Seven astronauts, a genuine American hero who carried the name's unpretentious friendliness into the space age. In British English, "wally" as a slang term for a harmless fool has made the name feel playfully self-deprecating in the UK, though the word's origin (possibly from a pickled gherkin sold at fairs) is entirely separate from the personal name.
In American comics, Wally West — the third Flash and arguably the character's most beloved incarnation — gave the name a superheroic dimension for generations of readers. Wally today sits in a sweet spot between the vintage and the unpretentious. Parents choosing it are typically reaching for something that feels genuinely warm rather than calculated — a name with the texture of a well-worn sweater, friendly on first hearing and easy across a lifetime.