Because of a conflict between the territory of Michigan and the state of Ohio over mismapped land borders, called the Toledo War. The western end of the Upper Peninsula was essentially unsettled and had not been surveyed in any significant way as yet, and much of what's now Wisconsin was part of the Michigan territory at the time anyway.

The cribbed version of the conflict is that both Michigan and Ohio claimed ownership of the city of Toledo, which was in 1835 an important lakeside port town, made potentially even more important due to the opening of the Erie Canal. Michigan, in 1835, was going through the process of becoming recognized as a state, and claimed that Toledo was, according to the wording of the Northwest Ordinance, situated within the legal borders of Michigan. Ohio, having a far larger population and voting power thanks to its statehood, was favored by congress during their arbitration of the conflict. As a bit of a consolation prize, the territory of Michigan was accepted as a state on the condition that they drop their claims to Toledo, and accept ownership of the western portion of the Upper Peninsula. The eastward portion, including the Mackinac area and Sault Sainte Marie, was already considered part of the Michigan territory.

Now, the details are far more interesting, in my opinion. It has to do largely with mistakes in mapping, and the wording of the 1787 Northwest Ordinance, and the management of the Old Northwest in the 1830s. I'll break those down in detail below.

The Mitchell Map - 1755

The importance of this map to this conflict can't be understated. The Mitchell Map, named after is creator, John Mitchell, was published in 1755. It is a highly detailed, comprehensive map of both British and French territorial holdings in North America at the time. It was also, of course, limited by the technology and practices of mapmaking of the time, too. This is not to say the map itself is wildly inaccurate, far from it, but it has some mistakes that become key later.

Te best information available at the time of its creation put the southern end of Lake Michigan considerably farther north than it exists in reality. Quirks like this are common in maps, especially those like this, that are the result of a combination of maps of various scales, which are themselves based on surveys and observations that were geographically or economically limited. Maps like the Mitchell Map, in other words, are two parts best observations mixed with two parts educated guesswork.

In any case, the problem was essentially that there was never any particular reason to survey the details of this, because surveying is more an economic process than a scientific one. Surveys were about establishing firm boundaries for land that was to be sold, or it was about "mineral" or "resource" surveys, which were intended to find exploitable natural resources. While collectively they can be put to use in purely scientific mapmaking projects, most of the mapping on the ground was a byproduct of the need to exploit or profit from land. And so, there was never any reason to send someone to do a close survey of the limits of the lake, until the border disputes between the Old Northwest territories needed to be resolved. I cut a good deal of detail here, but there is a lot more to say about mapping, and of the Mitchell Map itself I'd be happy to talk more about.

The Mitchell Map was immediately popular, and was immediately put to political uses, as well as just being a common reference map for any other reason. People have always liked maps, and Mitchell's creation was not only popularly consumed itself, it also was the basis for numerous copies of varying quality that were spread around the colonies.

The Northwest Ordinance - 1787

In 1787, congress established the rough borders of what it called the Northwest Territories in the Northwest Ordinance. The ordinance established territories around the lakes and was used to govern the affairs of those territories, settling political questions such as slavery, which was banned in the ordinance with the Northwest Territories. But importantly as regards our question and the Mitchell Map, it also established the territorial boundaries between these first territories. In that regard, article 5 of the ordinance states that the [congress] shall have authority to form one or two States in that part of the said territory which lies north of an east and west line drawn through the southerly bend or extreme of Lake Michigan.

When Ohio was made a state in 1803, its northern border was, of course, assumed to be in relation to the east-west line from the southern extreme of Lake Michigan straight eastward, but allowed room to claim coastline north of the Maumee river, “or where it shall intersect with the boundary between the US and Great Britain.” Even by 1803, there was a general acknowledgement that the southern end of lake Michigan was farther south than the map had led people to believe. The Ohio governor ordered a new survey of the line, which established Ohio's northern border on what was known as the "Harris line." A later Michigan survey found a different line, which they called the "Fulton line." Both were only completed after the War of 1812, but they created a bit of territory that both Ohio and Michigan claimed called the "Toledo Strip."

This was for the most part a non-issue until 1825, when the opening of the Eric canal brought canal traffic into the Great Lakes in numbers never before seen, and a port city like Toledo then became much more important. Then in 1835, Michigan declared itself a state, having satisfied the Northwest Ordinance requirements for statehood, and petitioned congress to recognize its government, citizens, and territory. Michigan, of course, claimed their southern border at the southern Fulton line, which included Toledo. Ohio congressmen, of course, objected to this line, and this conflict was what sparked what came to be known as the Toledo War.

The Toledo War

Calling it a war is coming at it a bit high, of course, but it was a very real political conflict which included acts of violence, and organized military forces. Much of this came out as a result of federal attempts to resolve the conflict, which often made things worse before they made them better. This was an issue because many Michigan citizens, as well as Michigan's governor, Stevens T. Mason, believed that there was an inherent bias in favor of Ohio, since Ohio had senators and congressmen to represent them in congress in a way that Michigan, as a territory, did not have. This meant that many congressional or federal interpretations were considered implicitly partisan in favor of Ohio.

When Michigan refused to retract its land claims, President Jackson replaced Stevens T. Mason with a new Territorial Governor named Jack Horner. This was considered a bad move at the time, as Michigan citizens loudly rejected his power and protested his appointment, essentially refusing to acknowledge his position. Protests sometimes included burning Horner in effigy, and embodying the city militias in preparation to defend Michigan's territory, or to oppose Ohio land surveys. The only "battle" of the conflict was a result of a Michigan militia company preventing an Ohio land survey from being completed, by firing over their heads. Newspapers on both sides publicized the event in much more dramatic terms than actually took place.

Authorities on both sides attempted to prove that they had de facto ownership of Toledo by various means. The election in Toledo for sheriff elected a Detroiter named Wood, proving that Michigan had a governing apparatus in place. Ohio, in another instance, held court in the dark of night to show that they had a functioning governing apparatus in place. Agents of the peace on either side made arrests for debt and other petty crimes, both of which were used as pretexts to prove Michigan or Ohio authority, all of these were attempts to show congress that it was Ohio/Michigan government in place, to sway opinions toward their side.

Wisconsin

There's a ton of interesting details about this conflict, but the end is that in 1837, Michigan was accepted as a state when it dropped its claims on Toledo and accepted, instead, the western half of the Upper Peninsula. Michigan had only claimed as its state boundaries the eastern half of the Upper Peninsula, which included the Mackinac region and Sioux Sainte Marie, in 1835. Prior to that, the Michigan territory itself already extended to include most of what would become Wisconsin, and Wisconsin itself only became an official territory in 1836, as a result of Michigan's preparation for statehood.

So it wasn't much like the Upper Peninsula was taken from Wisconsin, it's that Wisconsin's existence as a separate territory was itself based on the acceptance of Michigan's statehood. Until that conflict, Wisconsin didn't exist as an entity, and so it had no borders that weren't defined by the limits of Michigan's.

Conclusion

Political and territorial boundaries established by the Northwest Ordinance of 1787 were exacerbated by mistakes in the most commonly used map in the United States, introducing a territorial dispute between the State of Ohio and the Territory of Michigan. The dispute was resolved by encouraging Michigan to approve of a compromise in which they would extend their borders to include the western portion of the Upper Peninsula in lieu of claiming the city of Toledo. Wisconsin was created as a territory as a result of the first proposed borders of the State of Michigan.