The British number one, 20, had won the opening set 6-0 against Viktoria Kuzmova in Auckland but lost the second 7-5.
Raducanu called for medical treatment before the start of the third set, and just two points into her service game it became apparent she could not continue.
The 20-year-old was seen leaving the court in tears, clearly in distress after seeing her progress halted by yet another injury.
Raducanu had started 2023 by rallying for a 4-6 6-4 6-2 victory over emerging Czech talent Linda Fruhvirtova, 17, on Tuesday, having only just made her comeback from a wrist injury back in October that forced her to end her season early.
The former US Open champion was dogged by injuries in 2022, suffering no less than four retirements.
She's had seven injury retirements in all during her short career to date, including at Wimbledon in 2021.
With the Australian Open just 11 days away, Raducanu now looks in danger of missing the first Grand Slam of the year.