The Australian won the first set on a tie break before outclassing defending champion Murray in the second to win 7-6 (7-4), 6-2 and inflict the Briton's worst loss by ranking since 2010.
It was also the first time that Murray had lost his opening match at Queen's, having won the event a record five times.
With Wimbledon just over a week away, the world number one admitted that he has to play much better if he wants to win at SW19 for a third time.
"It's a big blow, for sure," Murray said, as quoted on BBC. "It has happened in the past where guys haven't done well here and gone on to do well at Wimbledon."
"There is no guarantee that I won't do well at Wimbledon, but it certainly would have helped to have had more matches."
"This tournament has given me great preparation in the past," he added, as quoted on The Guardian.
"When I have done well here, Wimbledon has tended to go pretty well, too. But, if I play like that, I certainly won't win Wimbledon. I can play better than that."
However, with a first round loss, the 30-year-old only received a cheque for £12,000, making the loss sting a bit more.
"I would have liked to have done well here for a number of reasons, that being a very good one," he explained. "It's unfortunate I couldn't have done better for that reason.
Murray was not the only top seed to suffer defeat as world number three Stan Wawrinka and world number six Milos Raonic also succumbed to first round defeats at the Aegon Championships.