Sahrom had qualified last of the final 16 riders and Glaetzer was completely caught off guard when the Malaysian attacked and roared away for a stunning upset at the Anna Meares Velodrome.
Glaetzer, who claimed the keirin gold on Friday, was inconsolable after committing an "elementary mistake".
"I was just coming into the bell too slow. I needed to be accelerating not just controlling," the 25-year-old from Adelaide told reporters.
"It's just hard, it's a nightmare unfolding. With three-quarters of the lap to go, I knew I had stuffed it and had to give it all.
"I had to try and fight but the race was gone by then.
"I tried to get through with minimum effort. I just needed to get my speed going. The speed just wasn't there."
Glaetzer, who also took keirin gold and a team sprint bronze at Glasgow four years ago, will return on Sunday for the men's 1,000m time trial.
"It will take me a while to get over this one but I will definitely be giving my best tomorrow," he said.
"It's just one ride and I'm going to absolutely rip it, try and make amends for today because I came in looking good for this and to lose it like that is embarrassing, disappointing and shattering, really."
(Editing by John O'Brien)
