Pops Mensah-Bonsu led Great Britain with 13 points and 12 rebounds, Nate Reinking also contributed 13 points, while Brazil were led by Tiago Splitter's game-high 21 points.
GB forward Joel Freeland was disappointed they let a winnable game slip away.
"It was a tough game," he said. "We were better prepared mentally. We need to find a way to close games.
"Even if you look at the games we played previous to this tournament, we never find a way to close."
He added: "There are mistakes that need to be corrected. We need to be mature and get the win."
Both teams struggled to score in the opening period but after Brazil had taken a 4-0 lead, Dan Clark came into the game and got GB going with six quick points. With Brazil unable to score again, Great Britain took an 11-4 lead into the second quarter thanks to a Mike Lenzly three-pointer just before the buzzer.
Brazil finally got going in the second but with Mensah-Bonsu making some big baskets, Great Britain kept their noses in front. In the final seconds a turnover led to a Brazil lay-up that saw the teams go into the break tied 27-27.
Brazil tried to pull away early in the third but Reinking and Freeland came up with baskets to keep GB just ahead. However, Brazil finished the quarter with a 6-1 run to lead 48-43.
After Brazil had scored the first basket of the fourth, GB fought back, going on a 14-6 run and taking a 57-56 lead after back-to-back three-pointers from Luol Deng.
The lead lasted just a few seconds as Brazil responded with a 7-0 run to finally take control of the game. Great Britain had a chance to pull within three points in the final seconds but were unable to convert from the line and Brazil held on for the win.
"I am very proud of my guys," said GB head coach Chris Finch. "Our goal in this game was to be in a position to win in the last four minutes but we didn't get the stops we needed when it mattered.
"Brazil did that but we gave ourselves chances throughout the game. I am pleased with the effort though."
Also in Great Britain's group, Russia improved to 2-0 thanks to their 73-54 win over China and Spain also remained unbeaten after their 82-70 win over Australia.
The Spaniards are next up for the GB Men and the two teams will meet on Thursday, 8pm tip-off, while the GB Women are back in action on Wednesday when they take on Spain at 4.45pm.
