In a bout which went into overtime, the bigger and stronger-looking Tsurtsumia held on for a 4-1 scoreline after the two men tied at 1-1 at the end of the mandatory six minutes.
Gardner, 33, narrowly escaped death when stranded in temperatures of minus 25 degrees Celsius after his snowmobile broke down in a forest in Wyoming in 2002.
He lost a toe to frost bite and last year also suffered a dislocated shoulder in a motorcycle accident.
The articulate American had no regrets about his tactics in the bout. He said: "I gave 100 percent, I have no bad feelings. I was trying to score a point to win the match but he countered me and beat me. I tried."
Tsurtsumia stands at 1.95 metres and towered above Gardner, whose physique is much stockier and who stands at 1.87 metres.
Gardner said that all his opponents had studied his technique closely and knew exactly what was needed to beat him.
"These people (my opponents) have come here having learned each set-piece. They saw what I can be worked on, where I'm weak," he explained.
Gardner beat the seemingly invincible Russian Alexander Karelin to win the 130kg gold medal at the Sydney Games in 2000 but that category has been dropped in Athens to make room for the women's wrestling events.
Gardner now meets Iranian Sajad Barzi for the bronze. Tsurtsumia's opponent for gold will be Russia's Khasan Baroev.
In the other finals to be contested on Wednesday, Russia's Alexei Michine will fight for gold in the 87kg division against Sweden's Iranian-born former world champion Ara Abrahamian.
In the 66kg class Farid Mansurov of Azerbaijan will meet Turkey's Seref Eroglu, while in the 55kg category Istvan Majoros of Hungary will battle Gueidar Mamedaliev of Russia.
Elimination bouts in the three other Greco-Roman weight categories (60kg, 74kg and 96kg) began on Wednesday with medal bouts set for Thursday. The freestyle competition begins on Friday in a corresponding format to the Greco-Roman event.