The South African, who lives in Bradford, led by two sets and was two legs up in the third before fellow outsider Nathan Aspinall began a stunning fightback.
Petersen seemed to be cruising through the last-16 clash, played over the best-of-seven sets, but a freak incident proved a turning point when his third dart tumbled out of the treble 20 bed, taking another 60 points with it.
The African Warrior was one leg away from going three sets ahead at that stage, but Aspinall survived to hold his throw before Petersen missed three set darts at double 12 in the next game.
Aspinall, who had won only one of the first nine legs, then took out the set after another bounce out – from single 20 – denied Petersen a shot at double-top in the deciding leg. That swung the tide and the Stockport man won the next two sets to go three-two in front. Petersen – ranked 70 in the world by the PDC, three places higher than his opponent – levelled to send the match into a deciding set, which went to a tie-break at two legs all.
Petersen missed with darts to break Aspinall’s throw in the fifth leg and the Englishman then held his nerve to win the final two and clinch a dramatic 4-3 success.
“I think missing the three darts at double 12, very closely, cost me,” reflected Petersen afterwards. “But looking back there’s many more.
“In the beginning I probably missed two darts in the first two sets, on any finish and I thought I was playing really well, finishing-wise.
“My scoring wasn’t phenomenal and you could see him gaining confidence. He has really progressed as a player and I think he was phenomenal in the game itself, holding his nerve.
“I put pressure on him all the time, but he kept holding. I should have been 3-0 up and you can only look back and think if I was 3-0 up it would have been an easier game.”
Despite his exit, Petersen believes his three wins in the tournament, over Wayne Jones, Ian White and Steve West, have revived his career.
He said: “It is not the last you are going to hear of Devon Petersen. I will progress from here.”