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Hewitt, now ranked 165th after standing number one with two Grand Slam titles a decade ago, was defeated by Slovenian Blaz Kavcic 6-4, 7-6 (7/3).
The 30-year-old Hewitt has been plagued this season with slow a recovery from foot surgery. He last played a month ago, winning a round in Atlanta before exiting. Hewitt went out in one hour, 40 minutes, losing serve four times.
"It could have gone better," said Hewitt of his loss. "I'm still struggling a little bit with the foot. I knew he was a good competitor coming into the match.
"Before the Open I'll have to hit a lot of balls, get a lot of treatment and see what happens."
Melzer, a French Open semi-finalist and Wimbledon doubles champion last year, went down 7-5, 6-3 to Russian Igor Andreev and has now lost in all three of his starts on the North American hard-courts.
"It was a tough match, a tough first set," said Melzer. "At 5-5 I had lots of break points but couldn't convert them. At the moment I'm not winning the important points.
"If you can't do that then you can't win matches. In the second set I let him off from several 0-30 situations. You really do need some luck. Unless you are playing really well you hardly ever get that.
"I'll take a day off on Tuesday and then fly to New York and get on the practice court. I need to get some training in my legs and feel the ball again.
"I'll hope to get through the early rounds of the Open without damage and get my confidence back. That's the most important thing right at the moment."
The 18th-ranked Austrian was put out in his openers in Washington at the start of the month and last week in Cincinnati after suffering with injury.
The 81st-ranked Andreev started his week on Sunday at the last tune-up before the US Open, defeating Australian teenager Bernard Tomic.
The Russian needed just over 90 minutes to go past Melzer, notching eight aces to six and breaking three times for the victory.
Andreev was joined in the third round by former Australian Open finalist Marcos Baghdatis, who defeated American Ryan Sweeting 7-5, 6-1. Sweeting's serve was broken five times.
In first-round play at the event shifted from New Haven, where it formerly shared a week with the WTA, Austria lost its second player as Argentine Carlos Berlocq defeated Andreas Haider-Maurer.
The 72nd-ranked Austrian, who lost the Vienna final to Melzer last autumn, retired injured against Berlocq to hand over a 7-5, 4-1 victory.
Frenchman Julien Benneteau defeated Brazil's Ricardo Mello 6-1, 6-3 while American qualifier Michael Russell beat Adrian Mannarino of France 6-4, 6-7 (3/7), 6-2.
Andy Roddick heads the field in this former tobacco processing town, beginning his week on Tuesday night.
Ukrainian Alexandr Dolgopolov takes the third seeding behind Melzer with American John Isner, who lives not far away in Greesboro, on fourth.
Young American Ryan Harrison provided a good showing for the home nation as he beat Romanian Victor Hanescu 1-6, 6-3, 6-4.
