Raonic, the No. 14 seed from Thornhill, Ont., dropped a 7-5, 7-6 (4), 6-3 decision to South Africa's Kevin Anderson. Canada's Eugenie Bouchard and Daniel Nestor also suffered defeats Friday.
Raonic's serve was broken three times by his 23rd-seeded opponent.
"I wish I could have played better," Raonic said. "He was taking advantage of my second serve, I wish I could have done more on his. I don't think I served too great.
"I lacked execution and struggled with being up a break in the third set. I didn't play well and a big part of that was down to him. He made me feel uncomfortable."
Raonic had more aces than his opponent — 16 compared to eight — and also produced more winners — 50 against 31. But the Canadian also made more unforced errors, 38 compared to Anderson's 15.
The hard-serving Canadian lost to Argentina's Juan Monaco in the third round last year.
"I would have hoped that I would be playing better on clay now," he said. "I'm frustrated with myself."
The No. 77-ranked Bouchard, from Montreal, was dispatched by defending champion Maria Sharapova of Russia 6-2, 6-4 in a second-round match that was completed Friday due to rain a day earlier.
Bouchard trailed by a set and a break when the match was halted Thursday night by rain. The 19-year-old put up a stubborn defence Friday before falling on a first match point as her forehand sailed over the baseline.
"It was a good experience, to play one of the best in the world," Bouchard said. "I saw her game, her shots.
"She kept me on my heels a lot. I tried to counter that and was able to play my best game at some stages."
Bouchard, who made her first WTA semifinal last weekend in Strasbourg, converted only one of six break chances and committed 22 unforced errors. Sharapova also won their only previous meeting in March in Miami.
"I did better than Miami, it was more competitive this time," Bouchard said. "I wasn't quite as blown off the court as in Miami.
"It was an improvement. I was excited and motivated and was really looking forward to the match."
Nestor, from Toronto, and new partner Robert Lindstedt of Sweden lost their second-round men's doubles match. Jonathan Dasnieres de Veigy and Florent Serra of France advanced with a 7-6 (3), 6-3 victory.
It was Nestor's worst result at Roland Garros since he was ousted in the second round in 2006. The third-seeded duo lost in 75 minutes to end Nestor's 19-match win streak in Paris.
Nestor had claimed the French Open title the previous three years — with Nenad Zimonjic in 2010 and Max Mirnyi in 2011 and 2012 — and owns four trophies overall. He has also played in three other finals (1998, 2002 and '08).
"Nothing went right for us." said Nestor. "The best comparison is to a boxing match, where you get pounded early.
"They came out swinging and we were on our heels the whole time."
The loss was the first in Paris for the 40-year-old Canadian since he and Zimonjic were beaten in the 2009 semifinals by Lukas Dlouhy and Leander Paes.
"They didn't do anything to surprise us, we weren't making shots," Nestor said. "In the first game they hit four winners to break and that set the tone.
"They were hitting big shots and we were just hanging on. When we needed to make shots, we didn't."
Nestor admitted it was tough to lose in Paris, saying "It was a good run."
Nestor and Lindstedt broke twice but lost serve three times in the tight match. Nestor is still entered in mixed doubles with France's Kristina Mladenovic.
Anderson, meanwhile, became the first South African to reach the fourth round at the French Open since Wayne Ferreira in 1996.
"Wayne is a great player to aspire (to) and try and reach some of his achievements he made," Anderson said. "He was a great player, and (I've) still obviously got a long way to go to match some of his other achievements. But being in the fourth round is great. A of lot people think clay is not a surface I enjoy playing on."
Anderson has won two career titles compared to Ferreira's 15, and he faces a tall order as his next opponent is Spanish clay-court expert David Ferrer, seeded fourth.
They are 1-1 but both of those matches were on hard courts and Ferrer is a far better player on clay, having reached the semifinals at Roland Garros last year.
"He's definitely one of the best players in the world obviously, and on clay courts he can be even tougher," Anderson said. "I played a good match against him at Indian Wells this year, so I'll definitely look back at that match and see what I did well. Clay court is a little bit different."
With files from The Associated Press.