Selby rattled in a brilliant 125 in the 10-minute, one-frame event against Ken Doherty, but was promptly dumped out in the next round by Nigel Bond, a former winner of the tournament.
Selby made the better start to the match, but a 56 break from 2011 winner Bond saw him eventually run out a comfortable 67-33 victor.
"Nigel had a great break in the end," Selby told Sky Sports. "It's a great tournament and hopefully I'll be back next year."
Reigning champion Barry Hawkins, who has now won eight consecutive matches in the tournament, eased into the last 16 with a comfortable 73-1 victory over Anthony McGill.
The first match of the night saw Michael Holt, who is enjoying his best run at the shootout, progress to the last 16 courtesy of a 40-31 victory over Ryan Day.
Jimmy Robertson quickly followed him in the next round after a comprehensive 67-8 success over Anthony Hamilton, who barely had a look-in during the 10-minute match.
It took three minutes for the first point to be scored in the third match as Mark Williams did battle with Jamie Jones. The 2000 and 2003 world champion scraped home a 45-37 win after Jones had fought back from a 25-point deficit.
Jack Lisowski, aided by a superb 43 break, followed Williams into the next round following a fine 48-41 triumph over Robbie Williams, who had earlier put out Ding Junhui.
Kurt Maflin led from start to finish as he secured a 63-16 win over Mark Davis. Joining him in the last 16 was Liu Chuang after he eased past Ricky Walden with a 58-18 scoreline.
Martin Gould made light work of Mark Joyce with a 61-1 success, while a 41-break by Mark Allen helped secure a 65-8 victory over Peter Lines.
Dave Harold beat Gerard Greene 61-36, Alan McManus ran out of time as Thepchaiya Un-Nooh edged to a 42-41 win, while Dominic Dale brushed aside Marcus Campbell 61-17.
The final matches saw Michael White and Stephen McGuire progress against Ben Woollaston and Matthew Selt respectively.
In the afternoon session, John Higgins had thrashed 96-1 by Lines, while Shaun Murphy lost to Liu Chaung.
The knockout draw for the last 16 will be held prior to the start of play on Sunday.
The last four rounds of the tournament are then due to take place with the final during the evening session.