The third-seeded Indian went down 14-21 21-15 12-21 in a contest that lasted 59 minutes.
It was quite an upset for Saina, who had beaten Han in their previous two encounters.
The world number 26 Chinese seemed up for the challenge from the word go and matched Saina's trademark smashes besides cornering her with some deft net-play to take the opening game with ease.
Saina came back strongly in the second to draw level but Han showed a lot of tenacity to outplay the Indian in the deciding third game.
The Chinese matched Saina stroke-for-stroke before edging ahead to end her losing streak against the world number three.
Earlier, Parupalli Kashyap and P V Sindhu had exited in the in the second round yesterday.