The 20-year-old home hope was brought back down to earth when crashing to a 6-2 7-6 (2) defeat to the Finnish qualifier.
It followed his eye-catching victory over American world number 14 Taylor Fritz - which came off the back of breaking into the men's top 100 on Monday.
Draper lost serve twice in the first set and Ruusuvuori, who is set to enter the world's top 50 next week, comfortably held serve in the second set and controlled the tie-break to close out the win.
The defeat meant the British wildcard will miss out on back-to-back Queen's quarter-finals and he admitted he must improve ahead of the Rothesay International Eastbourne next week and Wimbledon later this month.
"I could have done a few things better, there are not many times when I get outplayed and I felt like today was one of those days. I felt he played a great match," British number four Draper told reporters.
"I am always pretty hard on myself but other players maybe keep it in their head for a few days but I will definitely get over it quite quickly. I am playing Eastbourne next week, Wimbledon is around the corner.
"I can definitely take some positives from this week, beating a top player in Taylor but I can also learn some lessons from today which will help me moving forward."
Draper's exit means Ryan Peniston is the only British player remaining in the men's singles draw of the ATP 500 event and he will hope to follow up his shock win over French Open runner-up Casper Ruud when he takes on Francisco Cerundolo of Argentina for a place in the quarter-finals on Thursday.