Given a bye in the first round of the Stella Artois Championships, the four-times Wimbledon semi-finalist lost 6-2 3-6 7-6 to Karol Beck -- a Slovak who had never before beaten a top 10 player.
Henman, who became the first British man in 41 years to reach the French Open semi-finals last week, had earlier in the week said he was delighted to be back on grass. On Wednesday, however, the world number five was not good enough.
"I'm disappointed right now but, in the context of Wimbledon preparation, I don't think it will have any bearing," the 29-year-old said.
"I am happy with the way I played and am playing...it is leagues ahead of how I was playing last year.
"This is an example of looking at the greater scheme of things. Sure, I would have liked to have won but a week on Monday I will be ready."
Beck, who won a challenger last week in Surbiton, southern England, harried the Briton from the off, Henman not winning a point until the third game.
Henman fought off one match point in the tiebreak with a deep volley but there was little he could do on the second as Beck ripped a fantastic return straight back at him and the Briton netted the return.
SECOND LOSS
Henman's French Open conqueror Guillermo Coria had no more luck. The Argentine suffered his second loss in four days on Wednesday, slumping to Taiwan's Yen-Hsun Lu 6-2 6-4.
Coria, who had been left sobbing and heartbroken after Sunday's defeat to Gaston Gaudio at Roland Garros, had little to smile about at Queen's Club in his loss to the 102nd-ranked player.
The Argentine said: "It`s difficult to adapt to the grass right after Paris. It`s so fast and the footwork is so different.
"I know I don`t have the best chance at Wimbledon, but I want to try and play well there. My goal is to be number one this season and win some more titles...the Olympics and maybe the U.S. Open, why not Wimbledon?"
Former champion Lleyton Hewitt breezed through, though, out-gunning Spain's Marc Lopez from the back of the court.
Twice champion at the Queen's Club, Hewitt was too strong on centre court as he eased through 6-3 6-2 in 57 minutes.
Sixth seed Hewitt, Wimbledon champion in 2002, is looking for a third title this year. He will next face Jonathan Marray, who won an all-British match against Jamie Delgado 6-4 6-3.
"It feels good to get back on the grass," said Hewitt. "The first few games are always tough to find your feet, no matter how much you practise. But I started moving better and better as the match went on.
TOURNAMENT ENJOYMENT
"I've always enjoyed playing here at this tournament and you enjoy it even more when you've had the kind of results that I've had here."
The Australian now has a 22-3 record in the tournament.
Hewitt's fellow-Australian Todd Reid was less impressive, however, losing 6-3 6-1 to last year's runner-up Sebastien Grosjean.
"I just didn`t have the goods out there today," said Reid. "He was playing too well. I had a slow start and had trouble on my serve."
As polished as Grosjean and Hewitt were, the loudest cheer of the day was reserved for Welshman Ian Flanagan -- Grosjean's next opponent.
The 22-year-old, ranked 866 in the world, caused one of the biggest upsets in tennis history on Tuesday when he beat Wimbledon runner-up Philippoussis.
His expected comedown never materialised as he beat world number 78 Victor Hanescu 7-6 6-3. Hanescu had beaten Goran Ivanisevic in the last round.
Flanagan received a standing ovation after claiming his second senior-level victory and will relish taking on fellow baseliner Grosjean next.
"Today's match was more difficult after yesterday's frenzy," said Flanagan. "But I managed to stay calm and get through it in the end. Some of it's a shock that I'm in the third round at Queen's, but I knew I had the ability to do it."
