Penn State held a 21-point lead over Mississippi early in the second half, but the Rebels were able to pull off the comeback.
With the game tied at 72 with 16 second left, Penn State had the ball coming out of a timeout. Sophomore Izaiah Brockington had his inbounds pass intercepted, and Penn State fouled on the opposite end of the court.
Ole Miss hit two free throws to help finish the 74-72 win over Penn State as part of the NIT Season Tip-Off at the Barclays Center in Brooklyn.
Lamar Stevens led all scorers with 22 points. Center Mike Watkins had a double-double with 18 points and 12 rebounds.
Penn State will next play Syracuse Friday.