Fifth seed Nishikori reached the final here last year but will lose a chunk of ranking points after he hit 25 unforced errors and just 14 winners in succumbing to Frenchman Herbert.
Nishikori will now move on to Barcelona next week, where he owns two titles as he works on his clay form as the run-up to Roland Garros intensifies.
Herbert, who overcame Fernando Verdasco in the first roud, struck 31 winners in his upset to avenge a three-set loss to Nishikori in Rotterdam earlier this season.
“I’m very happy to finally beat Kei,” the 49th-ranked Herbert said. “I was very confident with my defence.
“I came to the match with good feelings after the first round.”
Nishikori lost the Monte Carlo final a year ago to 11-time champion Rafael Nadal.
Download our app and read this and other great stories on the move. Available for Android and iOS.