The 31-year-old ended his career in 2011 but came back for his home tournament and played well, but was beaten 6-2 7-6 (7/3) by Milos Raonic.
Canadian Raonic needed a win to keep his London Finals hopes alive, while it remains to be seen if Johansson will follow through with his pledge to go into retirement again.
Top seed David Ferrer also won, beating Jack Sock 4-6 6-3 6-1, with the fifth and seventh seeds, Ernests Gulbis and Grigor Dimitrov, also victorious.
Gulbis beat Igor Sijsling in two sets while 'Baby Fed' Dimitrov saw off Jan-Lennard Struff for the loss of four games.
Fernando Verdasco and Kenny De Schepper were the other second-round winners, getting past Jarkko Nieminen and Kevin Anderson respectively.