The 5-3 defeat was Selby’s first reverse since beating Ronnie O’Sullivan in the Crucible final in May.
Liang notched a 71 break en route to taking a 2-0 lead, but Selby drew level with an 81 and 119.
The home player responded with a century of his own before taking the next with a 50 break and, although Selby claimed the seventh frame, the Englishman failed to pot a ball in the eighth as Liang clinched the scalp.
'Like a thunderbolt' - Lisowski wows with brilliant pot
Elsewhere, defending champion Neil Robertson fought back from 2-0 down to beat Michael Georgiou 5-3 while Alan McManus edged an all-Scottish affair with John Higgins 5-4.
Robin Hull also progressed after huge breaks of 139 and 134 set him on course to oust Graeme Dott 5-3.
'An unbelievable shot' - Lisowski wows with brilliant red
'Terrific pot' - Wilson drains stunning long pot