Murray was playing again at Queen’s less than 24 hours after winning his first-round match against Australia’s Alexei Popyrin.
From the start, the three-time Grand Slam champion looked uncomfortable during the points and was heavily limping between them.
Murray said the issue was not a back spasm, but caused a “loss of strength, coordination and control” issues in his right leg.
“When I walked up the stairs before going out, and in the pre-match warm-up, my back was uncomfortable,” said Murray.
“It was an awkward atmosphere because everyone could see there was a problem and I didn’t know if I should play or stop. It’s disappointing.
“In hindsight I wish I hadn’t gone on the court.”
After being broken in the first game, Murray held serve in the third and had treatment as he lay on the court during a medical time-out in the next changeover.
A huge cheer of encouragement greeted Murray as he picked up his racquet again but he lasted just two more games before stopping at 4-1 down.
Murray waved to all sides of the court after shaking hands with Thompson, thanking the home crowd for their support on a tough afternoon – and seemingly for their backing ever since he made his debut at the west London club in 2005.
“That’s never the way you want to win,” said Thompson.
“He’s a great champion and it’s disappointing to see him hurt.”