Rutter and Jezac SMT Racing team-mate John McGuinness had set the early pace in testing but the first qualifying session was cut short after 10 minutes following a crash involving Luis Carreira.
Portuguese rider Carreira, an experienced Isle of Man TT rider, later succumbed to his injuries.
"The Macau Grand Prix Committee regrets to announce that Luis Filipe de Sousa Carreira, competitor no. 33, from Portugal, in the Macau Motorcycle Grand Prix – 46th edition, has succumbed to injuries sustained in a racing accident during the qualifying session this afternoon," an official statement read.
“No other rider was involved in the incident, which occurred at Fisherman's Bend at 15.58. The qualifying session was immediately red-flagged.
“The medical services, a fast intervention vehicle, fully equipped, and an ambulance with two doctors in attendance, which were located at the side of the accident, immediately went to the rider's aid.
“As a result of the doctors' diagnosis, Mr. Carreira was immediately evacuated by ambulance to the hospital, where he was admitted at 16.08.
“Continuous CPR was performed, however he succumbed to his injuries at 16.28.
“The Macau Grand Prix Committee has contacted the family and the members of the team, and the Committee expresses its sincere condolences.”
When the session was cancelled, Rutter was top of the timesheets, with Martin Jessopp in second and McGuinness third.
Rutter, who rode for MSS Bathams Kawasaki in the 2012 BSB championship, is looking to add to his record-breaking seven race victories at the demanding street circuit.
Qualifying 1 result (shortened):
Michael Rutter (Jezac SMT Racing) 2m:28.326s
Martin Jessopp (Riders Motorcycles) +1.634s
John McGuiness (Jezac SMT Racing) +2.611s
Gary Johnson (Quattro Plant) +4.096s
James Storrar (DMR) +4.239s
Free practice result:
John McGuiness (Jezac SMT Racing) 2m:29.914s
Martin Jessopp (Riders Motorcycles) +0.768s
Michael Rutter (Jezac SMT Racing) +1.026s
Horst Saiger (Saiger-Racing.com) +3.567s
Gary Johnson (Quattro Plant) +4.208s