Coming off a trip to the finals in last week's Rogers Cup, Raonic was treated for a pinched nerve in his neck after five games of the match, which featured an opening set lasting for almost one hour. After the on-court session, Raonic managed to carry on.
Raonic admitted that his usual 210-225 kilometre-per-hour serving speed has been compromised in his recent matches due to the physical problem.
"It made a few situations more difficult and it also relieved pressure on his return games," he said. "But I was able to do a lot of things well to compensate for that lack of serving ability."
The loss was the second against Isner for the 12th seed from Thornhill, Ont. Raonic was also beaten by his North American rival in their only other meeting last summer in Toronto.
Raonic ended a frustrating afternoon with a paltry four aces and lost his serve twice. Isner rained down 13 aces in victory.
The world No. 10 will likely benefit from some rest after playing for much of the past 10 days with the US Open starting a week from Monday in New York.
"I should be fine once the arm gets up to speed," Raonic said. "I'm very optimistic going into the Open.
"I'm doing a lot of things well and getting a lot of confidence. I played great last week and played well this week."
He said the shoulder issues came up early in the Rogers Cup week where he made the final against Rafael Nadal and reached a top 10 ranking for the first time.
"I'll get in some training and concentrate on the physical and stay away from the tennis for a few days," te 22-year-old said. "I'll then get back onto the court as much as I can."
Raonic lost the opening set in the tiebreaker between the two noted big servers, with Isner nailing it down with an ace.
Isner secured a break in the penultimate game of the second set on a forehand winner to the empty court and sealed victory a point later with a service winner after 96 minutes.
Elsewhere, Roger Federer overcome a rough start and emerged from his string of subpar showings since Wimbledon. He beat Tommy Haas 1-6, 7-5, 6-3 to advance to the quarter-finals.
The fifth-seeded Swiss star has been struggling to get his game back in shape since he was upset at Wimbledon by a player ranked 116th in the world. He's switched rackets and been limited by a sore back.
He's won in Cincinnati an unprecedented five times, including last year.
Also Thursday, No. 1 Novak Djokovic needed only 50 minutes to beat qualifier David Goffin, 6-2, 6-0, leaving him on track for a little ATP history. He's lost in the finals four times at Cincinnati, the only Masters series event he has yet to win.
A victory would make him the first player to win all nine Masters.
"I played four times finals, so it's been one of the tournaments where I've performed well," Djokovic said. "Never managed to make the final step, and hopefully this year I can do so.
"I have an extra motivation and an opportunity to make history in this tournament, so I'm very inspired to play well day after day."
It appeared Federer wasn't long for the tournament after a stunningly bad start against Haas. The 35-year-old Haas needed only 31 minutes to win the first set and was up 4-2 in the second before Federer started to approach the net, hitting shots with confidence and taking control.
He pumped his right fist after a backhand return hugged the line to set up a break point that put him up 5-3 in the final set, and again when he finished it off — one of his few satisfying moments in months.
Earlier Thursday, seventh-seeded Juan Martin del Potro earned a berth in the quarter-finals, holding off 27th-ranked Spaniard Feliciano Lopez 6-4, 1-6, 6-4.
Russian qualifier Dmitry Tursunov pulled off another upset, beating third-seeded Spaniard David Ferrer 6-2, 6-4. The 44th-ranked Tursunov never lost his serve while reaching the quarter-finals for the first time in six appearances at the event.
Also reaching the quarter-finals were second-seeded Andy Murray and sixth-seeded Tomas Berdych.
Fourth-seeded Rafael Nadal beat Grigor Dimitrov 6-2, 5-7, 6-2 in a two-hour evening match and will play Federer in the quarter-finals Friday night. Nadal has overcome an injured left knee that wiped out the end of last season and a stomach virus that affected him early this year, taking a career-best mark of 50-3 into the quarter-finals.
On the women's side, second-seeded Victoria Azarenka, fourth-seeded Agnieszka Radwanska, fifth-seeded Li Na, 10th-seeded Caroline Wozniacki and 14th-seeded Jelena Jankovic advanced to the quarter-finals.
Azarenka withdrew from last week's Rogers Cup in Toronto with a lower back injury. The previous week, she lost to Samantha Stosur in the finals of the Southern California Open.
Azarenka reached the quarter-finals for the first time in three appearances at the event.
Last year, Djokovic lost in the finals to Federer. It was a record fifth win in Cincinnati for the 32-year-old Swiss star, who is hoping to get his game straightened out on the fast, blue centre court that has always seemed to favour him.
Federer was beaten in the second round at Wimbledon by Sergiy Stakhovsky, his earliest exit from a Grand Slam event since 2003. That ended Federer's streak of reaching the quarter-finals in 36 straight major tournaments.
The improbable upsets were just starting.
Federer lost to a 114th-ranked qualifier in the semifinals at Hamburg and was beaten by a 55th-ranked player in his opening match at Gstaad, Switzerland. There were reasons that figured in the losses: He was experimenting with a larger racket and his back was bothering him.
He skipped Montreal last week to get ready for Cincinnati, hoping a good showing this week would get him ready for the U.S. Open.
— With files from The Associated Press.