England's Wilson, who had already won four titles this season, appeared to have the first-round match under control as he recovered from losing the opening two frames to reel off six in a row to lead 6-2 in the best of 19 frame duel.
But the ice-cool Lei stormed back in astonishing fashion to win seven frames in succession as Wilson lost his way.
Wilson finally stopped the rot to win the 16th frame with a superb century clearance but missed a routine pot on the black early in the next frame to allow Lei the chance to seal one of the biggest shocks in the tournament's history.
Lei looked set for victory when he fluked a red but then missed an easy red with the finish line in sight as he led 60-25. Wilson then returned to the table and win the frame on the black to close the gap to one frame.
Again, Lei led in the next frame, but again he faltered and Wilson levelled for 9-9 to set up a decider.
Wilson looked favourite then, but Lei took his chance in the final frame to claim victory with a composed break of 66.
The 33-year-old Wilson is the latest player to suffer the so-called Crucible Curse which refers to the fact that no first-time champion has ever defended the title the following year.
