6-4 6-7 (7-9) 6-4 to Ugo Humbert of France.
The British, beaten in ATP finals at Sydney in 2017 and Delray Beach last year, broke Humbert.
But Evans, who saved a match point and defeat third seed Karen Khachanov, was again denied and was broken by Humbert.
He failed to grasp two break-point opportunities to make it 4-4 and another for 5-5, which allowed the French player the chance to serve out, winning on his third match point.
“The start of the match wasn’t easy as he didn’t give me much pace and suddenly he accelerated,” said Humbert. “I need to find a solution and came to the net more.
“I was four match points down, but I was mentally strong and I took my opportunities. I remained aggressive and when I won the second set, I knew I’d regained the momentum.”