Positron emission tomography (PET) is traditionally modeled as discrete systems. Such models may be viewed as piecewise constant approximations of the underlying continuous model for the physical processes and geometry of the PET imaging. Due to the low accuracy of piecewise constant approximations, discrete models introduce an irreducible modeling error which fundamentally limits the quality of reconstructed images. To address this bottleneck, we propose an integral equation model for the PET imaging based on the physical and geometrical considerations, which describes accurately the true coincidences. We show that the proposed integral equation model is equivalent to the existing idealized model in terms of line integrals which is accurate but not suitable for numerical approximation. The proposed model allows us to discretize it using higher accuracy approximation methods. In particular, we discretize the integral equation by using the collocation principle with piecewise linear polynomials. The discretization leads to new ill-conditioned discrete systems for the PET reconstruction, which are further regularized by a novel wavelet-based regularizer. The resulting non-smooth optimization problem is then solved by a preconditioned proximity fixed-point algorithm. Convergence of the algorithm is established for a range of parameters involved in the algorithm. The proposed integral equation model combined with the discretization, regularization, and optimization algorithm provides a new PET image reconstruction method. Numerical results reveal that the proposed model substantially outperforms the conventional discrete model in terms of the consistency to simulated projection data and reconstructed image quality. This indicates that the proposed integral equation model with appropriate discretization and regularizer can significantly reduce modeling errors and suppress noise, which leads to improved image quality and projection data estimation.