Raonic, from Thornhill, Ont., now heads to the U.S. Open after losing his first meeting with Wawrinka 2-6, 7-6 (7-5), 6-4.
The 21-year-old came to the court leading the tournament with 54 aces and added 17 in his losing effort over nearly two and a half hours. Raonic ended with 36 winners and 38 unforced errors, converting on only two of his six break chances.
"I would have done a lot different," said the disappointed Raonic. I started well but I was waiting for him to lose the match instead of me winning it.
"It hurts to lose like that, it went by fast at the end. I was too passive in the second set. I needed to create more chances for myself."
Raonic dominated in the 33-minute first set as Wawrinka struggled to find his rhythm. But once the Swiss player got comfortable his heavy shots began to fall against Raonic, who was playing Cincinnati for the first time.
Raonic played level throughout the second set, which went into a tiebreaks. Wawrinka then levelled the sets at one apiece after more than an hour.
In the third set, Wawrinka went up after an early break and finished off the victory on a second match point after missing an overhead on his first.
Raonic, who is ranked 19th and will be seeded when the U.S. Open begins a week from Monday, also lost in the quarters last week in Toronto at the Rogers Cup to American John Isner in straight sets.
Raonic stands 33-14 on the season with titles at Chennai and San Jose in the first two months of the year.
He remains optimistic head to New York.
"I'm on the right track, I'm playing good tennis, I have some things to change but they are not that big.
"I feel like I can do something at the Open. I feel I'm well-prepared and more experienced in what I have to do to win."