Big-serving Hurkacz, the 2023 champion in Shanghai, won 6-4, 6-3 as the 39-year-old former world number one faltered against an opponent a decade his junior.
"I didn't feel myself on the court," the Serbian veteran said afterwards.
"It's a super-quick surface, completely different from Beijing. If you lose your serve, it's enough to lose a match."
Djokovic was playing three days after winning the title in Beijing, where he has still never lost a match on the professional Tour.
He hunched over and squatted down between points on a cool evening in Shanghai while a lively Hurkacz refused to give much away.
Djokovic was broken in the fourth game of the second set as he double-faulted to give Hurkacz a 3-1 lead.
The Pole held his serve to see out the win and will face either Italy's Lorenzo Musetti or Chinese wildcard Zhou Yi in the third round.
"It's very difficult to return his serve, almost impossible," Djokovic said of his opponent, who sent down 13 aces across the one-hour-and-28-minute match.
"I didn't adjust, and it was a really tough draw for me to play him in the first match-up."
Hurkacz had advanced to the Beijing semi-finals but ended his match early due to a strained muscle.
It was his first-ever victory against Djokovic in nine meetings on the Tour.
"It was a challenging match, always," Hurkacz said.
"I was pleased with how I performed, how I received in important moments."