Saina, seeded fourth, was shocked 22-10 15-21 20-22 by Yeon Ju Bae of Korea in one hour and 11 minutes.
The other Indian female shuttler in the fray, P V Sindhu too failed to clear the second hurdle, losing to less formidable Kirsty Gilmour of Scotland.
World number 11 Sindhu, who stunned world number six Ji Hyun Sung of Korea in straight games in the opening round, lost 21-10 19-21 16-21 to 30th ranked Gilmour in a keenly-contested match that lasted exactly an hour.
The Indian male shuttlers were no better as K Srikanth and Ajay Jayram also bowed out in the second round. Young Srikanth gave sixth seed Boonsak Ponsana of Thailand a tough time before going down.
Srikanth fought valiantly for 58 minutes against the seasoned Ponsana before losing the duel 21-15 18-21 15-21. Jayram too was shown the door in the second round by top seed Lee Chong Wei of Malaysia.
It was a creditable performance by Jayram against the highly-rated Lee Chong Wei, who has to dug deep to pocket the 21-18 21-18 win and secure his place in the quarterfinals.
Photos: Shraddha Kapoor, Kim Sharma at 'Haseena Parkar' screening
Mumbai to Goa train: First look at the glass-top Vistadome coach
Shuttler Ashwini Ponnappa keeps it short and sexy on social media
Photos: Narendra Modi, others at Marshal Arjan Singh's funeral
Photos: Sussanne Khan and Nimrat Kaur spotted at a spa in Juhu