London, who began the match as favourites, were undermined by the absence of their England international, Joel Moore, and Chester took the initiative with the American Bob Book scoring nine consecutive points to tie the game on 48.
Another run of three unanswered baskets put the Jets
59-55 ahead and then a basket from Mark Ogley opened a decisive 66-61 lead.
Chester, who beat London 85-74 in last season's third round, are joined in the last eight by their Budweiser League rivals Guildford, Birmingham, Worthing, Thames Valley, Sunderland and Leicester.
Sunderland's Russ Saunders and Doncaster's Derrick Izilien swapped punches in the tie at the Northumbria Centre and were both disqualified. Saunders scored 32 points, including 20 in the third quarter.
Birmingham Bullets faced First Division Swindon without their American Tyrone Thomas, but the England international Tony Simms spearheaded their 66-54 victory with 13 points.
Accident-prone Michael Obaseki suffered an eye injury in Thames Valley's 98-75 win at Hemel Royals, a month after his nose was broken in two places.
Guildford Kings, who lost by 45 points to Barcelona on Wednesday, took a tentative step towards defending the cup with a 92-73 victory at Oldham Celtics, on the back of 34 points from the American Tracy Pearson.Reuse content