In the late matches, three-times champion Andy Roddick is facing 19-year-old Denis Kudla, while defending champion Milos Raonic is to play Tobias Kamke.
The 24-year-old Querrey, who has not won a singles tournament since August 2010, suffered another setback on the heels of a 2011 season that was marred by injuries.
He made eight double faults against Russia's Istomin and quickly faded after winning the first set.
Istomin survived 15 aces from Querrey and broke the American's serve to take a 4-2 lead in the second set.
In earlier games, 19-year-old Ryan Harrison defeated Belgian eighth-seed Olivier Rochus 4-6 6-2 6-3. Harrison had to overcome 27 aces from Rochus and a 3-1 deficit in the third set to advance and build on his breakout performance in last weekend's Davis Cup victory.
Matthew Ebden defeated Dudi Sela 6-7 6-2 7-6 while France's Julien Benneteau topped Ryan Sweeting 7-6 7-6.
(Writing by Jahmal Corner in Los Angeles; ;Editing by Peter Rutherford)