Reigning world champion Selby is still awaiting his first silverware of the new campaign after he was beaten by world number 69 Lee Walker.
41-year-old Walker, who has only reached the quarter-finals stages of a ranking tournament just once, recorded an impressive win against the world’s best player beating him 5-2 in the last 64 stage.
Selby has failed to reach the quarter-finals in the three major ranking events he has played in so far this season.
Walker now will hope to reach the Last 16 stage when he takes on Robert Milkins in the next round. Victory then would set up a clash against either Anthony McGill or Stephen Maguire.
There was also disappointment for Murphy who suffered a 5-3 loss to Welshman Daniel Wells.
Murphy, who suffered defeats in the China Championship and Paul Hunter Classic finals, threatened a comeback from 4-1 when he reduced his deficit to 4-3 before Wells sealed the match with a 76 break. Wells will next face Luca Brecel who won the China Championship last month.
Elsewhere, there were wins for Indian Open champion John Higgins, Ding Junhui and Stuart Bingham. However top 16 star Liang Wenbo suffered an agonising 5-4 defeat to fellow China star Li Hang. On Monday Chris Wakelin produced the shock scoreline of the day beating world number 7 Barry Hawkins.
Here is the Last 32 draw.
Lee Walker vs Robert Milkins
Anthony McGill vs Stephen Maguire
Cao Yupeng vs Stuart Bingham
Luca Brecel vs Daniel Wells
Marco Fu vs Peter Ebdon
Li Hang vs Ricky Walden
Joe Perry vs Ryan Day
Xiao Guodong vs Ding Junhui
John Astley vs Jimmy Robertson
Mark Williams vs Chen Zhe
Michael Holt vs Kyren Wilson
Thepchaiya Un-Nooh vs Chris Wakelin
Neil Robertson vs Ben Woollaston
Mark Allen vs Allan Taylor
David Gilbert vs Martin Gould
Matthew Selt vs John Higgins