Gerald, the younger brother of former world No 8 Jurgen, played his part by handing the world No 1 a serious workout in two hours and 23 minutes.
A passive Murray dropped serve twice in the opening set and world No 68 Melzer saved eight set points with some brave hitting before the Briton took the opener during an intense tie-break.
He then got the break in the seventh game of the second set but failed to claim victory when serving at 5-4 as the 26-year-old left-hander Melzer forced a break of his own.
