The Clonmel super heavy lost a 3-2 split to Colombian Cristian Salcedo after a barnstormer of a fight in Hamburg.
A newcomer to the international scene this year, the South American has racked up a 2-2 record in the World Series of Boxing and won a silver in the American Championships in Honduras. By virtue of this silver medal, Salcedo was seeded fourth here and had received a bye into the last 16. Gardiner had dominated Korean Hyeon Do Kim in the opening round on Saturday night.
A frantic first round saw both fighters trade heavy shots up close. A close three minutes, Gardiner hit home with some nice body shots, but Salcedo perhaps landed the cleaner single shots.
Salcedo fought in flurries in the second, but it was Gardiner this time landing the eye-catching shots, both to the body and upstairs.
There was a slow start to the third, with Salcedo the busier, before Gardiner dug in deep, Salcedo was perhaps getting the better of the round before a huge left hook from the Clonmel boxer in the closing seconds made a big impression
It was not to be however, with Gardiner losing on the cards, taking the fight 29-28 on two cards, losing 28-29 on another two, and a harsh 27-30 in the eyes of the Cuban judge.
Light heavyweight Joe Ward and flyweight Brendan Irvine will be in Last 16 action for Ireland later today.