Murray, who was the fourth seed in the tournament, struggled on the fast hard-court surface in Tokyo, going down to Novak 6-3, 7-6.
"I just didn't play as well as the rest of the summer. I did well to kind of fight my way back into the match, but unfortunately it didn't turn around," the 19 year-old Scot said.
"I didn't have too much time to practice because I arrived on Monday... but it was definitely a quicker court than most of the courts we play nowadays, because they are normally slow.
"All the players have been saying it's pretty quick, but it's not too fast, so that you can play from the baseline, but it certainly favours guys who like to come forward," he added.
Murray is the only player who has beaten world number one Roger Federer before a final this season, and he was scheduled to meet the Swiss player again in the semi-finals in Tokyo.
"I was three matches away from playing against him and in these tournaments you can't expect to get to the semi-finals every week," said Murray.
"It's difficult. Roger Federer or those at his level only can do it, so I wasn't looking far ahead."
Murray, currently ranked at a career-high 16th, had a bye in the first round along with the 15 other seeded players, while Novak defeated Czech compatriot Robin Vik 4-6, 6-4, 6-4 to reach the second round.
In other second round action, second seed Tommy Robredo of Spain beat Lu Yen-hsun of Taiwan 6-4, 6-1, while defending champion Wesley Moodie of South Africa defeated Stefan Koubek of Austria 6-3, 6-4.
Germany's Rainer Schuettler, the winner here in 2003, upset 16th seed Paul Goldstein of the United States 6-3, 6-2, while Argentinean Juan Monaco downed compatriot Edgardo Massa 7-6, 6-3.
In the Women's first round, Argentine Paola Suarez upset seventh seed Lucie Safarova of the Czech Republic 6-4, 6-4, home town favourite Ai Sugiyama defeated Finland's Emma Laine 6-4, 6-3, while Australia's Alicia Molik beat Croatia's Jelena Kostanic 7-5, 6-3.