Earlier, five-times Olympian and Sydney 2000 gold medallist Natalie Cook and fellow Australian Tamsin Hinchley lost to a Czech pair in Pool.
The defeat ended Cook's career, one of the most illustrious in the sport.
May-Treanor and Walsh had not dropped a set in their previous two matches but were uncharacteristically error-prone as they lost the first set 21-17 to Austrian sisters Doris and Stefanie Schwaiger in the same group.
"We came out a little bit flat and you can never ever come out flat in Olympic competition," Walsh said.
The Americans kept their cool and recovered to take the last two sets 21-8 15-10.
"Now the fun begins. We're going to see where the draw puts us. We have four more matches to win to become gold medallists, that's our goal," said Walsh.
"We're going to come out on fire. No more coming out flat."
It was an emotional night for Cook at Horse Guards Parade where the specially built 15,000-seat venue offers stunning views of the capital's skyline, lit up by the London Eye and Big Ben.
The 37-year-old, who won bronze in Atlanta in 1996 and gold in Sydney in 2000 with Kerri Pottharst, was in tears after she and Hinchley were beaten 21-16 18-21 15-11 by Marketa Slukova and Kristyna Kolocova.
The Australian pair are now out of the event after losing all three of their pool matches.
"I've been blessed. It's a privilege to be part of this Olympic team, to represent your country," said Cook, her voice cracking as the tears welled up.
"There are 10,000 athletes in the world every four years (at the Olympics) and I've done that five times. I couldn't be prouder of that.
"You just want to play more matches out there because it's so much fun except when you don't win and then you're stuck between devastation and excitement because of where you are and what it means," said Cook.
Earlier, US men's pair Sean Rosenthal and Jake Gibb produced an aggressive display of spiking to beat a strong Latvian pair, jumping to the top of Pool D and regaining confidence after losing to a Polish duo.
Gibb and Rosenthal, who were fifth in Beijing in 2008 and prepared for London by collecting a string of trophies, were out to make a point against Aleksandr Samoilovs and Ruslans Sorokins who had won their first two matches of the Games.
"We wanted to prove it to ourselves, that we still know how to play this game," said Gibb after the Americans won 21-10 21-16 on the hottest day of the tournament so far.
The crowds loved the combination of exciting matches, sunshine, great views, thumping music and dance routines performed by a troupe in retro beachwear.
Samoilovs, known as the Lion King for his unruly mane of blond curls, is a natural showman popular with the crowds.
"The Lion King roars," shouted the commentator after one impressive spike from the muscular Latvian, to huge cheers.
But there was little the pair could do against Gibb and Rosenthal and instead of roars of triumph the frustrated Samoilovs was reduced to thumping the sand with his fist.
The home fans were disappointed to see British pair Steve Grotowski and John Garcia-Thompson exit the tournament after losing for the third time.
The host nation's hopes now rest with the women's pair, Shauna Mullin and Zara Dampney who play their last pool match on Thursday.
Brazil's Juliana Felisberta and Larissa Franca, the main title rivals to May-Treanor and Walsh, beat Czech pair Hana Klapalova and Lenka Hajeckova by two sets to love to finish top of Pool A without dropping a set.
The South Americans were in imperious form, winning 21-12 21-18 with both players finding impossible angles on their spikes.