The revelation has led to discussions about standards of beauty across the country's social media platforms, reports BBC.
The blogger, who initially boasted a follower count of more than 100,000 on Douyu, is believed to have used a filter on her face during her appearances, and had been renowned for her "sweet and healing voice".
China's Global Times said she had been "worshipped" as a "cute goddess" by some members of her loyal audience with some fans even giving her more than 100,000 yuan ($14,533, £11,950).
However, live-streaming platform Lychee News says the incident happened on 25 July, during a joint live-stream with another user, Qingzi on the Douyu platform.
The Global Times reports that all was as normal and that her fans urged her to show her face and remove her filter but she refused, instead apparently saying: "I can't show my face until I receive gifts worth 100,000 yuan ($11,950). After all, I'm a good-looking host."
Followers began to send her donations with the largest reported to be 40,000 yuan ($5,813, £4,780) during the session.
However, at some point, it seems the filter being used by the vlogger stopped working and her real face became visible to her viewers.
She is reported to have noticed only when people who had signed up to her VIP access room started exiting en masse.
Many of her original followers - especially men - are said to have stopped following her and withdrawn their transactions after seeing her true identity.
Most commentators said her followers were gullible, superficial and deserved to be "tricked" into parting with their cash gifts without first verifying her identity.
Users on both Bilibili and YouTube have captured the footage.
Qiao Biluo has since suspended her platform according to Weibo users, who are debating the impact of what happened.
Some users are saying it's good riddance to her for conning people out of their money. But others question the IQ of the men throwing money at her.
Some users are more sympathetic, asking people not to judge her by her appearance, noting that her popularity came from her voice, and that she might have to seek therapy after the backlash.
And some are praising the other live-streamer, Qingzi, who showed no reaction to Qiao Biluo's face being revealed.
How to stand out?
The story has been incredibly popular across Chinese social networks with more than 600 million people reading posts that use a hashtag which translates to "female vlogger experiences bug showing her old lady face" and more than 50,000 using the hashtag itself.
China has more than 425 million live-streamers and the use of face filters is something that is common across the myriad of social platforms.
The country is extremely nervous about the growing popularity of live-streaming. Broadcast media in China is tightly controlled, and with the exception of news coverage, footage on TV needs weeks of approval before it can be aired.
Live-streamers are discouraged from broadcasting in a public sphere, and are extremely restricted on what they can say. Expressing their opinions could result in a backlash from the authorities if the content is deemed to be politically sensitive or against government rhetoric. They also have to be careful that they are not seen to be "vulgar".
Consequently, many live-streamers simply sing karaoke in their bedrooms, or eat snacks for hours on end.
And the highly lucrative industry is saturated by young female users, who will go to extreme lengths to stand out.
In another twist, the attention the story has attracted means that although Qiao Biluo stopped live-streaming after the incident, her Douyu profile page now has 650,000 followers.