Agassi went down 7-5, 6-7 (4/7), 6-4, 7-5 to unsung Benjamin Becker of Germany. The 36 year old American had already made it clear that this was his farewell tournament.
Once the final service winner had flashed past him, Agassi slumped into his chair and cried as he got a standing ovation from the 23,000 crowd that had packed into the Arthur Ashe Stadium court to will him on one last time.
When he eventually spoke minutes later, Agassi for once, struggled to deliver.
"The scoreboard said I lost, but what it doesn't say it is what I have found over the last 21 years," he tearfully told the New York crowd.
"I have found loyalty. You have pulled for me on the court and life. I have found inspiration and you have willed me to win.
"Over the last 21 years I have found you and I will take you with me for the rest of my life."
The surprise defeat brought an end to a 20-year-long career that brought the Las Vegan eight Grand Slam titles and worldwide acclaim as one of the greatest-ever in the sport.
In 1999 became just the fifth player to win on all four Grand Slam title surfaces when he came from two sets down against Andrei Medvedev to lift the French Open crown.
In all he won four Australian Opens (1995, 2000, 2001 and 2003), two US Opens (1994 and 1999), one Wimbledon (1992) and one French Open (1999)
He was also World No.1 on several occasions and played in three winning Davis Cup squads for the United States.
But he had been increasingly crippled by a bulging disc in his lower back in the last 18 months and announced on June 24 that he would retire after this year's US Open.
"He is one of a kind and has brought so much to tennis. It was a great honour to play him," said Becker.
Agassi's retirement also brings down the final curtain on a golden era for men's tennis in the United States as he, Pete Sampras, Jim Courier and Michael Chang dominated the sport for a decade and more from 1990.