Ruud, a two-time French Open runner-up and a finalist in Sweden last year, suffered his first defeat against Monteiro, losing 6-3, 6-3 to the Brazilian whom he had beaten on each of their three previous meetings.
But the Norwegian is still in the running in the doubles with Nadal, advancing to the semi-finals of the clay-court tournament with a 6-4, 3-6, 12/10 win over France's Theo Arribage and Roman Safiullin of Russia.
Nadal returned to competition for the first time this week since his early French Open exit and next meets British fifth seed Cameron Norrie in the singles.
Top seed Andrey Rublev starts his campaign on Wednesday against 121st-ranked Thiago Tirante of Argentina.
Monteiro, the world no.85 was highly effective on serve, conceding just one break point in the entire match -- and saving it.
He also took advantage of Ruud's inconsistent service to break him three times in sealing his win in just under 90 minutes.
