Evans, 29, was beaten 7-6 (8-6) 6-4 in a second-round match disrupted by rain in Montreal, Canada.

British number one Kyle Edmund is also out after a 59-minute, 6-3 6-0 defeat by Russian eighth seed Daniil Medvedev.

The heavy loss for Edmund came just a day after he beat Australian Nick Kyrgios in straight sets.

In the doubles, Edmund and American Taylor Fritz - who won the singles title at Eastbourne - are through to the second round after beating Nikoloz Basilashvili and Jan-Lennard Struff 6-3 6-4.

But Andy Murray and Spanish partner Feliciano Lopez exited in the second round, beaten 2-6 6-3 10-8 by French duo Jeremy Chardy and Fabrice Martin.

Elsewhere in the singles, Austria's Dominic Thiem beat Canada's Denis Shapovalov 6-4 3-6 6-3 and will face Croatia's Marin Cilic after the 14th seed defeated Australia's John Millman 6-3 6-4.

Frenchman Richard Gasquet upset Japanese fifth seed Kei Nishikori 6-7 (6-8) 6-2 7-6 (7-4) while Wimbledon semi-finalist Roberto Bautista Agut of Spain beat Argentina's Diego Schwartzman 6-2 7-5.

Nadal overcomes slow start to progress

Eighteen-time Grand Slam winner Nadal - playing his first match since losing to Roger Federer in the Wimbledon semi-finals last month - struggled to cope with Evans' aggressive and accurate approach play in an entertaining first set.

Evans has moved to the cusp of the world's top 50 after an impressive year which has seen him rise from 190th to 53rd, proving again in Montreal against defending champion Nadal he has the ability to cause problems for the top players.

The Briton made the ideal start by breaking 33-year-old Nadal's serve in the first game of the match and holding to love in the next, before the world number two fought back to 3-3 and go on to claim two set points at 5-4.

Evans boldly employed serve and volley tactics to save both and, after a rain delay lasting almost half an hour, dominated the early part of the tie-break to earn two set points.

But top seed Nadal responded with a forehand winner and a smart second serve to save both, carrying on his momentum to claim the opener.

Nadal had lost only one of his previous 75 matches after winning the first set - against Kyrgios in Acapulco this year - and it looked ominous when he broke Evans in the first game of the second set.

A second, lengthier rain delay disrupted the Spaniard as he allowed Evans to break back in the first game after the resumption, but a break in the Briton's next service game proved decisive as Nadal wrapped up victory.

"Daniel is a player that combines an aggressive game with good hands. He's able to read the game very well, so he knows how to play tennis in terms of tactics," Nadal said.

"It was a tough first set. Then in the second, I was able to take advantage at the beginning, but then he broke me back. It was so important, that [next] game again to have the break."

Nadal will face Argentina's Guido Pella in the last 16.