The Pack (14-11) playing without senior guard Braxton Beverly, who was a late scratch, controlled most of the first half but struggled with turnovers and fatigue as the game wore on.
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Colorado State's David Roddy made a fadeaway jumper with 1:21 left for a 63-59 lead, and D.J. Funderburk had a dunk at the other end following an offensive rebound for the final field goal of the game at 1:03.
Isaiah Stevens had a reverse layup roll off and after a timeout with 22.6 seconds left, N.C. State's Jericole Hellems hit the back iron on a 3-point attempt. The Wolfpack had to foul three times to get Kendle Moore to the free-throw line - where he made two at 6.2. for the final margin.
Hellems led the way with 15 points and his big shots in the second half kept the Pack in contention in a game which seemed to steadily slip away.
Funderburk added 13 points and nine rebounds for State. Center Manny Bates also chipped in with 13 and had six rebounds and two blocks.
Freshman guards Cam Hayes and Shakeel Moore, playing extended minutes, struggled with their shots, going a combined 5-of-23 from the floor.
The Wolfpack led 28-25 at halftime but was hampered by 17 turnovers to only 10 for Colorado State.
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Three players scored in double figures for the Rams (20-6) led by Stevens with 18.
This year's tournament is taking place in the Dallas-Fort Worth metro area at the University of North Texas Coliseum in Denton and at the Comerica Center in Frisco.
The Associated Press contributed.