The 24-year-old, always not far from controversy, had made headlines earlier in the day after criticising rivals including Novak Djokovic and Rafael Nadal in an interview.
"Very eventful day to say to the least. Emotions got the better of me and I just wanted to say that the atmosphere was crazy out there today, just super unfortunate that it had to end in a default," Kyrgios later wrote on Instagram.
"Sorry Roma, see you again, maybe," he added before his troubles worsened when he was fined €20 000 and made to forfeit his tournament prize money and ranking points.
WATCH: Kyrgios forfeits game after Italian Open meltdown
His astonishing outburst came in his second round tie against 76th-ranked qualifier Ruud who had won the first set 6-3.
Kyrgios won the second set 7-6 (7/5) to level, but was furious after sending a forehand wide to hand a break back to Ruud early in the third set.
The 24-year-old turned and berated the crowd for walking during the point before slamming his racquet to the floor amid a string of swear words.
Kyrgios told a spectator: "You're not supposed to walk across the court as I'm serving, do you understand that?"
Kyrgios then received a code violation for unsportsmanlike conduct and a game penalty, with the umpire calling the tournament referee courtside.
"I'm giving 100 percent. I don't want to play when this shit is going on," Kyrgios was heard saying.
He then kicked a water bottle, before throwing a chair across court, packing his bag, shouting: "I am fu***ng done".
The Australian later posted "Hahahahaha" on Twitter along with crying with laughter emojis alongside a clip of Ruud celebrating going through 6-3, 6-7 (5/7), 2-1 to the third round.
"I think he got what he deserved," said Ruud of Kyrgios.
The Norwegian, who went on to lose to former US Open champion Juan Martin Del Potro, said he thought the ATP should take action.
"He thinks he can do what he likes.
"He was angry from the start, at that point in the third, I thought 'this has to be it' you can't go on like that and go on playing'.
"He was getting more and more angry. There's been a lot of talk about it with other players.
"I think there should be some hard punishment, there's been some other stuff as well. He should be suspended for at least six months."
But Swiss star Roger Federer - who Kyrgios has termed "the greatest player of all time" - did not agree.
"I don't think he should be suspended personally," said the 20-time Grand Slam winner.
"He walked off the court. What did he do? He hurt a chair? I mean, that's not enough for me.
"I don't know if he's on probation or not from his Shanghai (walked off court in 2017) thing or not.
"If that's the case, then obviously you can maybe look into it. If that's run its course, I don't think he should be suspended.
"A zero pointer, fine, all this stuff is already tough enough. He knows it's a mistake what happened."
World number one Djokovic, however, would not comment, stating: "I'll let others, officials, decide that. I have no opinion."
Kyrgios had earlier whipped up a storm over comments made about Djokovic and Nadal in an interview with NCR Tennis Podcast.
"I just feel like he's got a sick obsession with wanting to be liked," he said of world number one Djokovic.
"He just wants to be (Roger) Federer. I feel he wants to be liked so much that I just can't stand him. This celebration thing is so cringeworthy.
"No matter how many Grand Slams he wins, he will never be the greatest to me.
"For me, Federer will always be the greatest of all time."
He also said Nadal, who had lambasted the Australian as "disrespectful" after losing to him in Mexico earlier this year, was a bad loser.
"He's just my polar opposite, like literally my polar opposite. And he's super salty," said Kyrgios.
Kyrgios has a long and chequered history when it comes to discipline.
In 2015, in one of his more notorious outbursts, he was fined for making a sexually disparaging remark in Canada about the girlfriend of three-time major winner Stan Wawrinka.
The following year, he was banned for eight weeks after being accused of not trying at the Shanghai Masters.
Results from the ATP and WTA Italian Open in Rome on Thursday (x denotes seeding):
Novak Djokovic (SRB x1) bt Denis Shapovalov (CAN) 6-1, 6-3
Philipp Kohlschreiber (GER) bt Marco Cecchinato (ITA x16) 6-3, 6-3
Casper Ruud (NOR) bt Nick Kyrgios (AUS) 6-3, 6-7 (5/7), 2-1 -- defaulted
Juan Martín Del Potro (ARG x7) bt David Goffin (BEL) 6-4, 6-2
Diego Schwartzman (ARG) bt Albert Ramos Vinolas (ESP) 7-6 (7/5), 6-1
Jan-Lennard Struff (GER) bt Marin Cilic (CRO x9) 6-2, 6-3
Kei Nishikori (JPN x6) bt Taylor Fritz (USA) 6-2, 6-4
Stefanos Tsitsipas (GRE x8) bt Jannik Sinner (ITA) 6-3, 6-2
Fabio Fognini (ITA x10) bt Radu Albot (MDA) 7-6 (8/6), 6-3
Roger Federer (SUI x3) bt João Sousa (POR) 6-4, 6-3
Fernando Verdasco (ESP) bt Dominic Thiem (AUT x5) 4-6, 6-4, 7-5
Rafael Nadal (ESP x2) bt Jérémy Chardy (FRA) 6-0, 6-1
Novak Djokovic (SRB x1) bt Philipp Kohlschreiber (GER) 6-3, 6-0
Juan Martín Del Potro (ARG x7) bt Casper Ruud (NOR) 6-4, 6-4
Diego Schwartzman (ARG) bt Matteo Berrettini (ITA) 6-3, 6-4
Kei Nishikori (JPN x6) bt Jan-Lennard Struff (GER) 3-6, 7-6 (7/2), 6-3
Stefanos Tsitsipas (GRE x8) bt Fabio Fognini (ITA x10) 6-4, 6-3
Roger Federer (SUI x3) bt Borna Coric (CRO x13) 2-6, 6-4, 7-6 (9/7)
Fernando Verdasco (ESP) bt Karen Khachanov (RUS x11) 7-5, 3-6, 6-3
Rafael Nadal (ESP x2) bt Nikoloz Basilashvili (GEO x14) 6-1, 6-0
Naomi Osaka (JPN x1) bt Dominika Cibulkova (SVK) 6-3, 6-3
Mihaela Buzarnescu (ROM) bt Julia Goerges (GER x16) 6-4, 3-6, 4-4 -- retired
Carla Suárez Navarro (ESP) bt Alize Cornet (FRA) 6-3, 3-0 -- retired
Kiki Bertens (NED x6) bt Amanda Anisimova (USA) 6-2, 4-6, 7-5
Markéta Vondroušová (CZE) bt Simona Halep (ROM x3) 2-6, 7-5, 6-3
Darya Kasatkina (RUS) bt Katerina Siniaková (CZE) 2-6, 6-4, 6-1
Johanna Konta (GBR) bt Sloane Stephens (USA x7) 6-7 (3/7), 6-4, 6-1
Garbiñe Muguruza (ESP) bt Danielle Collins (USA) 6-4, 4-6, 6-2
Sofia Kenin (USA) bt Madison Keys (USA x13) 6-7 (2/7), 6-3, 6-4
Kristina Mladenovic (FRA) bt Belinda Bencic (SUI) 6-2, 2-6, 6-1
Maria Sakkari (GRE) bt Anett Kontaveit (EST x14) 6-3, 6-2
Petra Kvitova (CZE x2) bt Yulia Putintseva (KAZ) 6-0, 6-1
Naomi Osaka (JPN x1) bt Mihaela Buzarnescu (ROM) 6-3, 6-3
Kiki Bertens (NED x6) bt Carla Suárez Navarro (ESP) 6-4, 1-6, 6-3
Markéta Vondroušová (CZE) bt Darya Kasatkina (RUS) 7-5, 2-6, 6-2
Johanna Konta (GBR) bt Venus Williams (USA) 6-2, 6-4
Victoria Azarenka (BLR) bt Garbiñe Muguruza (ESP) 6-4, 3-1 - retired
Karolína Plíšková (CZE x4) bt Sofia Kenin (USA) 4-6, 6-4, 6-3
Kristina Mladenovic (FRA) bt Ashleigh Barty (AUS x8) 6-2, 6-3
Maria Sakkari (GRE) bt Petra Kvitova (CZE x2) 7-5, 5-7, 4-0 - retired