Querrey, a 2009 Newport finalist who entered the week ranked 21st in the world, was broken in the seventh game of the opening set by the 120th-ranked Smyczek.
Smyczek was ranked a career-best 101 in late February.
In the tiebreaker, Querrey saved match point twice — both with aces — but hit a backhand return into the net from along the back line on the final point.
It was the second match this year between the two.
Querrey won in straight sets at Indian Wells in March.
Results from the second day of the ATP Hall of Fame Tennis Championships on Tuesday (x denotes seeding):
Tim Smyczek (USA) bt Sam Querrey (USA x1) 6-4, 7-6 (10/8)
Rajeev Ram (USA x8) bt Adrien Bossel (SUI) 6-2, 6-2
Igor Sijsling (NED x3) bt Matteo Viola (ITA) 6-4, 6-1
Jack Sock (USA) bt Marinko Matosevic (AUS x6) 6-2 retired
Jan Hernych (CZE) bt Ante Pavic (CRO) 7-6 (8/6), 6-3
Prakash Amritraj (IND) bt Flavio Cipolla (ITA) 6-2, 6-3
Ivo Karlovic (CRO) bt Edouard Roger-Vasselin (FRA x5) 7-6 (7/5), 6-4
Vasek Pospisil (CAN) bt Denis Kudla (USA) 1-6, 6-3, 6-3