The Wolverines (11-4, 3-0 Big Ten) prevailed in a game that included 11 lead changes and 10 ties. The Cornhuskers (8-7, 0-3) lost for the first time in eight games at the new Pinnacle Bank Arena.
The Wolverines, who beat Northwestern by 23 points on Sunday, couldn't put away the Huskers until the last possession.
Nebraska led 70-69 with 33 seconds left after Petteway made the front end of a one-and-one. He missed the second free throw.
On the go-ahead basket, Walton brought the ball up the court and passed to Zak Irvin. Irvin gave Walton the ball right back on the give-and-go, and Walton went baseline on Leslee Smith to make it 71-70.
Nebraska set up a final play with 9 seconds left, but Petteway missed a layup. Smith got the rebound, but his shot missed, too. Michigan celebrated at center court after the final buzzer.
The Huskers came into the game 7-0 at Pinnacle Bank Arena, and there was a big-game atmosphere for the conference home opener as the crowd of 15,012 filed in. The Huskers were playing at home for the first time since Dec. 21, and they had lost three straight, including last Saturday's 31-point loss at No. 3 Ohio State.
The Wolverines won their fifth game in a row without preseason All-American Mitch McGary, who is out indefinitely after having back surgery.
Nebraska had played Ohio State on even terms the first 10 minutes before collapsing. There was no collapse this time.
There were six lead changes in the first half before Walton put the Wolverines up 33-30 at halftime with a buzzer-beating shot from just beyond the half-court line. Walton's long shot came after the Huskers had tied it on Biggs' drive to the hoop. Michigan inbounded with 3 seconds left and Walker dribbled up to the big red `N' at center court before launching his 50-foot swish.