served for the match leading 5-4.
Nadal netted a crosscourt backhand return to trail 15-0.
The Canadian then struck a down the line backhand volley winner to lead 30-0.
Nadal passed Auger-Aliassime with a crosscourt backhand winner to reach 30-15.
The power baseliner Auger-Aliassime then struck an inside out crosscourt forehand winner to reach matchpoint at 40-15.
Nadal netted a down the middle forehand return to end the match.
Nadal, who hit only one ace for the day, had been unable to cope with the Canadian's powerful serves.
The 22 year old Auger-Aliassime also repeatedly hit powerful groundstrokes into the corners of the court to keep Nadal off balance and out of position on many points.
Nadal still has a slight chance to reach the semifinals of Torino thanks to the round robin
format of the tournament if Nadal beats the third seeded Casper Ruud of Norway in straight sets Thursday
and depending on the other results posted today through Thursday by the tournament's other players in the final round of round robin play.
Nadal won the Australian Open and Roland Garros in the early parts of the year.
Auger-Aliassime, who struck 32 winners today versus 13 from Nadal, won tournaments this fall in Florence, Antwerp and Basel while going on a 13 match winning streak.