Rusedski, the fifth seed and British No 2, had received a bye into the second round, but lost in straight sets, 6-4, 7-5.
The British No I, Tim Henman, now carries British hopes and faces Franco Squillari, of Argentina, who defeated Hendrik Dreekmann, of Germany, 6- 1, 1-6, 7-6 in the first round.
Goran Ivanisevic also had a bad day in Hamburg yesterday, losing in less than an hour, 6-1, 6-3, to Germany's Rainer Schuttler.
The ninth-seeded Croatian, produced only three aces against the 59th- ranked German and hit eight double-faults. He has now lost four straight matches on the tour.
"My best weapon is my serve," said Ivanisevic. "Now, its a total disaster. I don't know what's going on."
Ivanisevic has talked to a psychiatrist in an effort to regain his form. Schuttler also beat him in February en route to capturing the Dubai Open.
Ivanisevic was not the only seeded player to lose yesterday. Fernando Meligeni of Brazil beat Sweden's 10th-seeded Tomas Johansson 7-5, 6-1.
In Rome, Venus Williams overcame poor form to beat Gala Leon Garcia 7- 5, 4-6, 6-4 in the Italian Open.
Other winners in Rome yesterday included the Australian Open finalist, Amelie Mauresmo, who easily beat Maureen Drake 6-2, 6-1, and Amanda Coetzer, who beat Germana Di Natale, of Italy, 6-3, 6-0.
The new world No 1, Yevgeny Kafelnikov, of Russia, and Henman are No 1 and 2 seeds respectively for the Stella Artois Championships at Queen's Club next month. Boris Becker and Rusedski will also play.Reuse content