World number one Saina had a one-game advantage but eventually lost 21-13 17-21 20-22 to the world number three in a gruelling final that lasted one hour and eight minutes at Putra Stadium.
Saina, who won the India Open Super Series last week, once again failed to come good against Xuerui, who has now beaten the Indian nine times in 11 meetings.
Saina emerged triumphant only on two occasions -- 2010 Singapore Open and 2012 Indonesia Open.