Argentina's Horacio Zeballos defeated Spain's Rafael Nadal 6-7, 7-6, 6-4 in the final of the VTR Open in Viña del Mar, Chile.
"I lack velocity in my reactions, I lack energy and power in my legs to stretch out the points, things that I've had all my career," Nadal said.
The Spanish star, who returned to action last week after being sidelined with a knee injury for seven months, also lost his doubles match on Sunday.
Italians Paolo Lorenzi and Potito Starace beat Nadal and Argentina's Juan Monaco 6-2, 6-3 in the doubles final in Viña del Mar.
"I'm playing with what I have and today I did not have any more," Nadal said in the post-match press conference.
The former world No. 1 and 11-time Grand Slam champion had not played since suffering a shock second-round exit at last year's Wimbledon at the hands of unheralded Czech Lukas Rosol, considered one of the biggest upsets in the history of that prestigious tournament.
The VTR Open is a small clay-court event in Viña del Mar, a coastal resort city located 120 kilometers (75 miles) northwest of Santiago, the Chilean capital.
Nadal also is scheduled to play two other small clay-court tournaments in February - the Brazil Open in Sao Paulo, which starts on Monday, and the Mexican Open in Acapulco, which begins on Feb. 25 - as part of his preparations for the French Open, which gets underway in May.
Nadal had planned to return to action in late December in Abu Dhabi, but a stomach virus forced him to withdraw from that exhibition tournament and he also pulled out of the recently concluded Australian Open. EFE