The 17-time Grand Slam champion failed to convert two break points in the opening set and made a flurry of backhand errors to lose the tiebreaker. Ramos-Vinolas then broke Federer in the eighth game of the third set with a forehand winner down the line and held the next game to close it out.
The last time Federer and Ramos-Vinolas played, at Wimbledon in 2012, the Spaniard won only three games. Ramos-Vinolas also came into the match with a 0-15 record against top-10 players.
"I'm always cautious," Federer said. "I don't underestimate or lack respect for anybody out there. These guys are all touring professionals, they know what they're doing."
It was the second straight year Federer was tested in his opening match at the tournament. Last year, he saved five match points before edging Leonardo Mayer of Argentina and going on to win the title.
"I just think the first round here in Shanghai has always been historically quite difficult, getting used to the conditions and the surface and the balls," Federer said. "Last year I got lucky. This year I didn't. So it's a pity."
Federer hasn't played since helping Switzerland win a Davis Cup match the week after losing to Novak Djokovic in the U.S. Open final.
Also, ninth-seeded Milos Raonic of Canada beat Thomaz Bellucci of Brazil 7-6 (5), 7-6 (2); No. 10 Gilles Simon of France beat Georgian qualifier Nikoloz Basilashvili 6-3, 4-6, 6-0; No. 11 Richard Gasquet defeated Gilles Muller of Luxembourg 7-6 (4), 6-2; and No. 12 Kevin Anderson of South Africa eliminated 37-year-old Tommy Haas of Germany 6-3, 7-5.
Haas, a former second-ranked player, has won only two matches in eight tournaments since returning from arthroscopic surgery on his right shoulder earlier this year.