The Thunderbirds faltered in the fourth quarter and were outscored by the Indians 15-4 during that span in a 45-35 Friday night.
North Callaway (0-2) jumped out to a 14-5 lead after the first quarter. Hallsville, though, responded with a 15-10 scoring edge in the second quarter to draw within 24-20 at halftime, then overcame a 31-30 deficit entering the fourth quarter.
Senior center Steven Coleman led the Thunderbirds with 12 points and seven rebounds. Senior forward Michael Pezold added nine points, while senior guard Brandon Hagedorn had eight points and five assists.
"I'm very proud of the players playing hard, especially on the defensive end," North Callaway head coach Matt Thomas said. "It's been about five years since I've had a team play this hard for me."
Hallsville (1-2) picked up a game-high 21 points from Hunter Wiley, while Evann Sells contributed 11.
North Callaway opened its junior varsity season with a 57-17 loss to the Indians. Freshman guard Sam Althiser provided a team-high eight points, including a pair of 3-pointers.
The Thunderbirds are the eighth seed for this week's Centralia Tournament and face No. 1 Salisbury in the first round at 4:30 p.m. Tuesday.