This paper proposes a model to estimate the packet loss probability in a mesh-based P2P network. Because of the irregular mesh structure, packet loss estimation for a mesh-based P2P network is more complicated than that in a tree-based network. The proposed model takes into account the channel packet drop rate, peer dynamics, and FEC protection to capture the heterogeneous packet loss behavior of individual video substreams transmitted over the irregular transmission paths of a mesh network. The simulation results show that the proposed packet loss model can accurately estimate the packet loss in a mesh-based P2P network. Based on the proposed model, we also propose a peer selection mechanism which can effectively mitigate packet loss propagation by selecting at a parent-peer the candidate child-peers that can achieve the minimal packet loss probability compared to others, to transmit the FEC redundant substream.