Murray, who was playing for the first time in a month, has lost his past seven sets. The slump began with 6-4, 6-2, 6-3 loss to Novak Djokovic in the Australian Open final and continued with a 6-4, 6-1 loss to Marcos Baghdatis in Rotterdam, Holland, in early February.
Against Young, who had to qualify for the tournament, Murray wasted early service breaks in both sets and lost his serve four times.
"I started the mnatch well and then when it got close to the end of the first set I just didn't do anything particularly well," Murray said. "I didn't do anything to really lift myself. He started playing better. I didn't find my way back into the match."
Young, a former junior champion who has struggled on the ATP Tour, began the week with a 1-3 match record and ranked 143rd.
"I thought I played pretty consistent," Young said. "I got a little nervous. There were some double faults that didn't make it halfway up the net. I've been in this position a couple of times and hadn't won the match. I just told myself this time I was going to see it through and not let the nerves get the best of me.
"There was never a point where I was 'Hey, I got this.' No. 'Hey, I got this' was after he hit the last ball in the net."
The tournament's top seeds, Rafael Nadal and Caroline Wozniacki, both won easily. Nadal breezed to a 6-0, 6-2 victory over South African qualifier Rik De Voest and Wozniacki topped American wild-card Sloane Stephens, 6-3, 6-2.
Former U.S. Open champion Juan Martin Del Potro continued his comeback from a year lost to wrist surgery by ousting 2010 tournament champion Ivan Ljubicic, 5-7, 6-4, 6-2. Del Potro, No. 4 in the world before his injury, has moved from No. 484 to No. 90 in the past three weeks and is 15-4 on the season.
The women's portion of the day got under way with Dinara Safina beating two-time tournament champion Daniela Hantuchova, 7-6 (2), 6-4. It marked the first time former No. 1 Safina had won back-to-back matches since late September and moved the Russian into the third round against No. 4 Samantha Stosur, a 6-2, 6-2 winner over qualifier Laura Pous-Tio.
The upsets began even before Young played Murray.
Somdev Devvarman of India beat No. 22 Marcos Baghdatis 7-5, 6-0.
Urszula Radwanska played on Court 4 just ahead of older sister Agnieszka Radwanska (No. 10), who ousted Iveta Benasova, 7-6 (5), 6-4 and the Polish siblings could meet in the quarterfinals.
Maria Sharapova put in overtime in her first match of the tournament, needing 2 hours, 56 minutes to beat Anabel Medina Garrigues 7-6, 6-7 (3), 6-1, and the upsets continued into the night, when 18-year-old wild card Christina McHale, ranked No. 112, toppled No. 13 Svetlana Kuznetsova 7-6 (4), 7-6 (7).