The Leeds potter crashed to an agonising 6-4 loss to Chinese young gun Zhao Xintong at York’s Barbican.
And with defeat the 51-year-old professional saw his hopes of a first UK quarter-final since December 2009 evaporate.
“I’m disappointed with the way I played,” admitted Lines, who pocketed a welcome £17,000 for his progress this week.
“I just didn’t score when I got my chances, it’s disappointing. He was the better player.
“I had to play better to win. My safety was pretty good, but you’ve got to pot some balls to win.
“I would have taken it at the beginning of the week, but it’s disappointing now. But I’m proud of my run here, it’s been a great week.”
Ironically it was over a decade ago that Lines achieved his best run at the UK Championship, battling through to the quarters at the Telford International.
But on the cusp of his best run at a ranking event since reaching the Paul Hunter Classic semi-finals in August 2018, the veteran professional failed to deliver when it mattered.
However, he did push rising star Zhao hard having trailed 3-1 at the interval.
Left-hander Zhao – the 24-year-old who is based in Sheffield – pinched the opening frame with a break of 46, before Lines levelled after winning a scrappy second.
A break of 58 helped Zhao increase his lead – and a fine century break of 122 made it 4-1.
But Zhao broke down on a break of 51 and Lines reduced his arrears, the first of a three-frame burst to throw the match wide open.
World No 26 Zhao, though, held his nerve and pocketed breaks of 92 and 67 to secure a place in only the second ranking quarter-final of his blossoming career.
“I’m pleased with the way I held myself together,” said Zhao.
“It was a very difficult match, Peter is a great player.
“When I was 4-1 up I thought I would win quickly, then he came back at me. I was under big pressure at 4-4 but I played well for the last two frames. I knew I had to keep my style and pot balls, I knew if I played slowly I would lose the game. It’s a very important win for me. It will give me more confidence if I win the tournament.”
Ronnie O’Sullivan stayed on course for a record eighth UK title after beating Noppon Saengkham 6-3.
O’Sullivan had to come from behind in a high-quality clash before wrapping up the match in style with a 120 break.