Merritt, the fastest in the world this year with 44.12, appeared on track with a heavily strapped left thigh in a bid to protect a hamstring injury suffered when he pulled up with cramp running in Monaco on July 30.
It was obvious from his first few steps that he was not going at full pace and after rounding the opening bend adrift of the field he stopped running and trudged the remainder of the race looking a dejected figure.
"I think I need some more rest," Merritt said.
"I've been feeling a lot better, I feel like the strength was there, but when I went for it, I could feel it.
"I thought I could get through the round not 100 percent. I got out and got to the curve and I could feel it."
Merritt, 26, served a 21-month suspension after a positive doping test for using of an over-the-counter male enhancement product in 2010 that contained the banned substance dehydroepiandrosterone (DHEA) and pregnenolone.
There was no intention to dope and nor to gain a competitive advantage, an international panel found.
He was cleared to run in the Olympics when the Court of Arbitration for Sport ruled last year on an International Olympic Committee rule that banned from the next Olympics any athlete sanctioned for six months or more.
Merritt has the year's two fastest 400 metres times with a best of 44.12 seconds.
He said he would probably not have run had it not been the Olympics and had yet to decide whether he would compete in the 4x400m relay.
South Africa's Oscar Pistorius said he was on the verge of tears after becoming the first double amputee to compete on the track at an Olympic Games in front of a packed crowd.
Pistorius, who races wearing carbon fibre prosthetic blades after being born without a fibula in both legs, qualified for the semi-finals to huge cheers with a season's best of 45.44 seconds behind winner Luguelin Santos of the Dominican Republic.
"I know Pistorius was the star of that (first heat) race but I still love him," world junior champion Santos said.
Nicknamed 'Blade Runner', the 25-year-old who is also in South Africa's 4x400 relay team, raced to huge cheers and looked comfortable throughout despite admitting he had been a bag of nerves before the race.
"I was so nervous this morning. Thanks to everyone for showing their support. I didn't know whether to cry. I had a mixture of emotions, " said Pistorius, who beat a previous season's best of 45.52.
"It was the most amazing experience, the crowd was amazing. I saw the South African flag... Just the experience of being here is a dream come true."
In 2008, Pistorius, successfully appealed against an International Amateur Athletics Federation (IAAF) decision to ban him from running in able-bodied events.
Merritt's absence means Grenadian world champion Kirani James, who comfortably came through his heat in first place, is likely to battle it out with Santos for the title in London.
James, 19, said he had wished Pistorius luck before his race: "Oscar is someone I respect. It takes a lot of courage and confidence to do what he has done today. Hats off to him."
Belgian twin brothers Kevin and Jonathan Borlee won their heats with the latter setting a new national record of 44.43 seconds, the fastest time of the day.