The German former world number one went down 6-7 (4/7), 6-4, 7-6 (8/6) on Court Philippe Chatrier to China's Zheng Qinwen, missing out on the chance to improve on her silver medal at the 2016 Rio Games.
Kerber announced last week that she would retire at the end of the Games after only returning to the tour from maternity leave at the start of the season.
The 36-year-old gave birth to a daughter, Liana, in February 2023, spending 18 months out of tennis in total.
It has been a tough return for Kerber, who lost in the first round of all of this year's Grand Slams so far.
But she beat four-time Grand Slam champion and fellow mother Naomi Osaka in the first round in Paris before seeing off Jaqueline Cristian and then former US Open finalist Leylah Fernandez.
"There are a lot of emotions," said Kerber, who has slumped to 212th in the world rankings.
"I gave everything I could on court and I think this is what counts for me, especially coming here, playing great matches, feeling that I can still play with the top players and having this decision in my hands, to have no injuries.
"I cannot stop better than here, playing for your country, playing on Chatrier, such a great crowd and I just tried my best."
Kerber, who won the Australian Open and US Open in 2016 before lifting the Wimbledon crown in 2018, said it had been tough to come back to tennis after such a long time away.
"I tried everything I could," she said. "I had good tournaments but of course I also had tough first rounds and it was not easy to find the rhythm
"But at the end, for me, it was always important to enjoy it, to come here to feel the atmosphere, the fans and seeing that I can play at a high level again.
"This is for me personally I think the biggest success I had."
Kerber said her three-hour battle against China's seventh-ranked Zheng, 21, was a fitting way to end her career.
"Having a match like this as my last match, showing also that I never give up and I tried everything until the end means a lot," she said.
Kerber said she had no regrets about the timing of her retirement even though she has shown she can still compete with top players in Paris.
"I will miss the fans, the emotions, the competition for sure and travelling around the world," she said.
"There's never a right time for making such a decision but for me it was the best timing."
