With Australia's number one Alex De Minaur opting out of the tie in Quito, the 28-times champions crashed out when Rinky Hijikata and Jordan Thompson were beaten 7-6(5) 6-4 by Gonzalo Escobar and Diego Hidalgo in the decisive doubles rubber.
India's N Sriram Balaji and his Austrian partner Neil Oberleitner, who entered the Australian Open men's doubles draw as an alternate pair, bowed out in the second round.
Gauff is a fan favourite in Melbourne
Nick Kyrgios will only feature in the doubles at the Australian Open, which begins at Melbourne Park on January 18.
Alcaraz resists red-hot Rublev to reach Wimbledon quarterfinals
MERTENS OVERPOWERS RUSE TO WIN FIRST GRASS TITLE
World number one Aryna Sabalenka reached the last 16 at the Miami Open when Elena-Gabriela Ruse retired injured on Saturday, while men's top seed Alexander Zverev beat Jacob Fearnley 6-2, 6-4 to reach the third round.
Australian duo Max Purcell and Jordan Thompson made amends for their Wimbledon final heartbreak by lifting the men's doubles title at the US Open with a 6-4, 7-6(4) victory over German pair Kevin Krawietz and Tim Puetz on Saturday.
Australia booked their place in the Davis Cup semi-finals as doubles pair Matthew Ebden and Jordan Thompson clinched the deciding rubber against the United States on Thursday.
Britain's Henry Patten and Finland's Harri Heliovaara beat Australia's Max Purcell and Jordan Thompson 6-7(7), 7-6(8), 7-6(11-9) in the men's doubles final at Wimbledon on Saturday to clinch their first Grand Slam titles.
Alcaraz worked on making his serve more potent in the off-season and was thrilled with how it held up against Nishioka.
Rohan Bopanna and his Australian partner Matthew Ebden have clinched a spot in the prestigious season-ending ATP Finals, marking the Indian's fourth appearance in the tournament.
Djokovic saved three breakpoints in stifling conditions to go 5-4 up but lost the opening set in a tough tiebreak as Opelka cranked up his serve
Novak Djokovic and Nick Kyrgios enthralled fans on their debut as a doubles team on Monday
Carlos Alcaraz failed to reach the Paris Masters quarter-finals after a thrilling 6-1, 3-6, 7-5 defeat to local favourite Ugo Humbert
All the action from Day 4 at the Australian Open on Wednesday
Australia now have the opportunity to avenge last year's final defeat by Italy after world number one Jannik Sinner inspired the holders to a 2-1 victory over Argentina.
Jannik Sinner's stupendous year may have been clouded by an anti-doping controversy but on the court he is finishing the season like an express train and has won 25 of his last 26 matches.
Lopez was cheered on by 22-time Grand Slam champion Nadal during his final event as a professional.
Canada powered into the quarter-finals of the Davis Cup for the third straight year with a victory over Britain on Sunday.
Following a victory over Alexei Popyrin at the Queen's Club Championships in his 1,000th tour-level singles contest, Murray withdrew due to the injury while trailing 4-1 in the first set of his second-round match with Jordan Thompson on Wednesday.
Former world number one Andy Murray celebrated his 1,000th tour-level singles match by beating Alexei Popyrin 6-3, 3-6, 6-3 to reach the second round at the Queen's Club Championships on Tuesday.
Murray, who in 2013 ended a 77-year wait for a British men's singles champion at Wimbledon and won the title again in 2016, had previously said he was unlikely to continue his career beyond this year and could bow out at the Olympics in Paris.
The duo made the men's doubles semi-finals at Wimbledon and the final of the US Open in the same season.
Rafa Nadal returned to action for the first time since January at the Brisbane International on Sunday, losing his doubles match but overall showing no obvious after-effects of the hip injury that ruined his year.
India's Yuki Bhambri and his French partner Albano Olivetti crashed out of Marrakech Open after losing the hard-fought semifinal to second seeds Lucas Miedler and Alexander Erler of Austria.
Local favourite Thompson saved three match points before prevailing 5-7, 7-6 (6), 6-3 against Nadal, who was playing his first tournament after nearly a year out with a hip injury.
Rafael Nadal said a MRI scan had shown a micro tear on a muscle.
Images from the men's singles Round of 16 matches at the US Open on Monday.
Spain's Rafael Nadal said on Wednesday that he is not sure if he will be able to play at next month's French Open.
Thompson, ranked 84, was more aggressive in a tighter second set and went 6-5 up with a service hold before breaking a tiring Griekspoor in the next game to drag himself into the contest.
Rafael Nadal continued his impressive return from a long injury layoff with a 6-1 6-2 demolition of wildcard Jason Kubler to reach the quarter-finals at the Brisbane International on Thursday ahead of this month's Australian Open.
Dominic Thiem, U.S. Open winner in 2020, has secured a place in the main draw of the Australian Open after the withdrawal of Reilly Opelka, the tournament organisers confirmed on Friday.
Nadal expresses doubt over Australian Open participation
Another day, another milestone reached for Novak Djokovic as he racked up Grand Slam victory number 350.
Spanish veteran Feliciano Lopez extended his career by at least one more day with an emotional victory at the Mallorca Open.
Australia beat Croatia 2-1 on Friday in Malaga, Spain, to reach the Davis Cup final for the first time in 19 years and will next face either Canada or Italy.
Earlier, title holder Borna Coric beat American Sebastian Korda 7-6 (5), 6-4, while another home hope Taylor Fritz survived a first-set thriller to beat Czech Jiri Lehecka 7-6 (14), 6-2.
Rising star Brandon Nakashima handed fellow American John Isner a first round defeat at the Indian Wells.
Hurkacz, Swiatek win as Poland march into United Cup final