The Australian, now ranked 82, fell to a 4-6 6-3 6-1 defeat to Argentine Alund in one of just two matches to be completed due to rain in Houston.
Hewitt, winner of the tournament in 2009, was broken five times over the final two sets as Alund wrapped up victory in an hour and 50 minutes.
The win was just Alund's fifth at tour-level, although he reached the semi-finals in Sao Paulo in February, when he lost to eventual champion Rafael Nadal.
Spain's Ruben Ramirez Hidalgo beat Somdev Devvarman 7-6(5) 6-0 in the day's only other singles match before the rain arrived and forced the postponement of any further play.
Top seed Nicolas Almagro meets Gael Monfils, who downed James Blake on the opening day of play, in the standout match of the second round.
US Clay Court Championship results
Martin Alund (Argentina) beat Lleyton Hewitt (Australia) 4-6 6-3 6-1
Ruben Ramirez Hidalgo (Spain) beat Somdev Devvarman (India) 7-6(5) 6-0
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