Raducanu has been plagued by injuries since winning the 2021 US Open titleEmma Raducanu retired from her second-round ASB Classic match in tears after injuring her ankle just 11 days before the start of the Australian Open.
The 20-year-old Briton won the opening set 6-0 against Slovakia's Viktoria Kuzmova, but lost the second 7-5.
She received medical attention before the start of the third set but signalled her withdrawal two points into her opening service game.
The former US Open champion had an injury-blighted 2022 season.
Having retired from five matches last year, Raducanu said she was injury free and feeling "good" following an exhibition match in December.
She began 2023 with victory over teenager Linda Fruhvirtova in her opening match in Auckland in preparation for the season's first major tournament in Melbourne.
Elsewhere, on Thursday, Coco Gauff beat fellow American and winner of the 2020 Australian Open Sofia Kenin 6-4 6-4.
The 18-year-old number one seed will play in the quarter-finals against China's Zhu Lin, who defeated seven-time Grand Slam singles champion Venus Williams 3-6 6-2 7-5 in a rain-interrupted match.
Zhu won the final four games of the match as she came from 5-3 down in the deciding set. Williams served for the match at 5-4 but the Chinese world number 84 broke and saved four break points as she held serve to move 6-5 ahead before again breaking serve.
