Josh Binstock and Sam Schachter, of Richmond Hill, Ont., lost in straight sets to Juan Virgen and Rodolfo Ontiveros.
Despite the 2-0 loss, it was a close game. The Canadian duo, which is ranked seventh in the world, dropped the first set 21-19 and pushed the second set to 26-24, but could not handle the 19th-ranked Mexicans.
Canada was perfect through the preliminary round and entered the quarter-finals with a 3-0 record.
With its victory, Mexico advances to Sunday's semifinals.
Canada's women's team will face Costa Rica in their first knockout game later Saturday.