The Nittany Lions rallied from a 10-point second-half deficit with an 11-0 run to take a 63-62 lead in the final minute. But Illini guard Chester Frazier broke free for an uncontested layup with 3.8 seconds to go and PSU guard Talor Battle missed a 35-foot heave at the buzzer as the Lions fell to 15-16 on the season.
Though the NIT and new CBI can technically take teams with losing records, it is doubtful Penn State will make the cut because there figure to be enough programs with winning records to fill both fields.
Illinois improved to 14-18 and will now face Purdue in tournament quarterfinal action Friday.
Penn State proved to be exceptionally resilient in this game despite playing without leading scorers Geary Claxton and Jamelle Cornley, who were both sidelined with knee injuries. For the second straight game, the Lions started four true freshmen and junior college transfer Stanley Pringle.
State trailed by as many as 11 in the first half before spurting behind the rookie guard Battle to make it 39-37 at the break. The Illini used their size advantage to keep the Lions at arm's length for most of the second half, doing much of their damage from the free throw line.
Shaun Pruitt's two foul shots stretched the lead to 62-52 with 4:53 remaining before Penn State began its spirited rally. The Lions shifted between zone and man defenses to keep Illinois off balance, and Battle pressed the offensive attack as the lead quickly evaporated.
His two free throws with 2:51 to go sliced it to 62-61. Less than a minute later, center Andrew Jones made two foul shots to give State its first lead, 63-62, since early in the game.
The teams swapped multiple empty possessions before Lion Danny Morrissey's 3-pointer with half a minute left was blocked and went out of bounds off a teammate.
Illinois worked the clock down until Calvin Brock missed a runner in the lane with eight seconds left, but the offensive rebound bounced out of bounds off a Penn State player.
Frazier inbounded for the Illini from under his own basket. He tossed the ball to guard Trent Meacham and stepped right under the basket. The Lions somehow lost track of Frazier, and Meacham tossed the 6-2 guard the ball for an open lay-in.
Rather than call timeout, PSU quickly inbounded to Battle, who flew up court before missing the long shot at the buzzer.
Battle finished with 17 points and five assists for the Lions. Forward Jeff Brooks, starting in place of Cornley, had eight points and a career-high nine rebounds before fouling out.
Forward Brian Randall led the Illini with 17 points. Pruitt had 10 points and 11 rebounds.