Australia's world No.8 was downed 4-6 7-6 (7-5) 6-4 by home favourite Matteo Arnaldi, who was cheered to the rafters at the Foro Italico by the excited Rome crowd on Friday morning.
But it was another dispiriting setback for de Minaur, who suffered his third loss in a row and had to soak up first-match defeats in back-to-back tournaments for the first time in three years.
After his opening-match drubbing to rising Rafael Jodar at the Madrid Masters, de Minaur had been expected to get a chance at revenge against the Spanish teen star in the last-32 by downing world No.106 Arnaldi.
But in another close contest after he'd taken the opening set, de Minaur was the one who faltered at the end of a thrilling affair that lasted four minutes shy of three hours.
Having broken back to tie the third-set score at 4-4, de Minaur then got broken to love and was so enraged at netting a game-losing forehand that he smashed his racquet into the clay in an uncharacteristic show of disgust.
The rain that started to come down in the denouement can't have helped his mood either, as de Minaur seemed increasingly irritated by his own inconsistency. He coughed up 37 unforced errors in all, prompting him at times to shout out in exasperation towards his coaching box.
De Minaur has now lost four of his past five matches on clay, which hardly bodes well as he sets his sights on the French Open later this month.
It wasn't the biggest shock of the day, though, as Novak Djokovic, in his return to action after two months out with a right shoulder injury, bowed out 2-6 6-2 6-4 at the hands of a Croatian qualifier 18 years younger than him.
The 20-year-old Dino Prizmic, world No.79 and rising, knocked out the 24-time grand slam champ with an ace on his first match point, and admitted afterwards: "He's my idol -- I just played unbelievably today."
The 38-year-old Djokovic, who hadn't played since losing to Jack Draper in the fourth round in Indian Wells in March, had his shoulder taped and looked far from his sharpest.
Djokovic wouldn't talk about his physical troubles, saying afterwards: "I hope you understand I will not talk about that. I want to congratulate Dino, deservedly the winner today.
"I came in to have a match or more. Unfortunately only a match. It's all right. I'm pleased at least that I fought until the end."
Alexei Popyrin now remains the last Australian in the singles draw in Rome after Sydneysider Aleksandar Vukic was well beaten 6-4 6-2 by American 16th seed Tommy Paul.
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