The Serb was leading 2-1 in the first set but a heel injury ended the match just 19 minutes in.
World number 28 Tipsarevic’s injury woes were prominent last week when he was stunned by 17-year-old Karen Khachanov, ranked 808th, at the Kremlin Cup .
Elsewhere wildcard Roberto Bautista Agut survived 15 aces from eighth seed Kevin Anderson to send the South African packing after three sets, Fabio Fognini bageled Martin Klizan in the deciding set, and Dmitry Tursunov saw off Albert Montanes in straight sets.
Valencia Open Men's Singles Round 1 matches on Monday
7-Fabio Fognini (Italy) beat Martin Klizan (Slovakia) 7-5 3-6 6-0
Marcel Granollers (Spain) beat Janko Tipsarevic (Serbia) 1-2 (Tipsarevic retired)
Roberto Bautista (Spain) beat 8-Kevin Anderson (South Africa) 3-6 7-6(5) 6-3
Dmitry Tursunov (Russia) beat Albert Montanes (Spain) 6-4 6-1