Selby got off to a solid start and picked up a 3-1 win over James Cahill before whitewashing Zhang Jiankang 3-0 at the Morningside Arena in Leicester.
Ben Woollaston made a similarly strong start, winning 3-0 against both opponents during the afternoon session.
With both Woollaston and Selby on two wins each, it was their head-to-head clash in the evening session which proved decisive.
Ultimately, it was the world number 42 who picked up the 3-1 victory to finish top of the group and seal his place in stage two of the event.
The second group on Thursday saw former world championship semi-finalist Joe Perry also crash out of the tournament.
The 47-year-old was held to a 2-2 draw in his opening match against Andrew Higginson.
Perry returned to action in the evening session and enjoyed a 3-0 win over Lukas Kleckers before falling to a 3-1 defeat against eventual group winner Elliot Slessor.
Big names tumble in Leicester
There were more high-profile eliminations on Wednesday as Barry Hawkins, Ken Doherty and Graeme Dott all crashed out.
China's Yuan Sijun was the big winner on the day as he whitewashed all his group opponents - including Hawkins and Doherty - to finish top and seal his spot in stage two.
Another Chinese talent, Lyu Haotian, won the other group on Wednesday as he claimed seven points from three games.
Former world champion Dott finished bottom of the group after winning just one of his three matches.