Greg Rusedski's Indian Wells challenge ended after he lost 7-6 (7-4) 7-6 (7-5) to 17th seed Fernando Gonzalez.
Rusedski looked sharper than in his first round game with Jeff Salzenstein but was outserved by the Chilean.
Rusedski saved three break points in the third game, the only time in the first set there were any break points.
The second set was also serve-dominated and Rusedski battled bravely before losing the last four points of the tie-break and with it, the match.
"It came down to a point here or there and that's what it's been like for me against the top players this year,' Rusedski said.
"Now I just need to start winning those one or two points and I feel like I'm getting closer to doing that."