Konta called for treatment to her right hip at the beginning of the third set but decided she could not continue and handed Svitolina the match 1-6, 7-6 (6), 3-2.
The retirement disappointed the crowd at Pat Rafter Arena, who had witnessed a fascinating match where Konta stormed through the first set before Svitolina regrouped and edged a high-quality second in a tiebreaker.
Konta joins top seed Garbine Muguruza (cramping) and fourth-ranked Caroline Garcia (lower back) as high-profile casualties at the season-opening tournament.
She is due to defend her Sydney International title next week ahead of the Australian Open but said she was unsure whether or not she would risk further damage before the year's first Grand Slam.
Andy Murray has withdrawn from the Australian Open, the tournament announced on Thursday.
“Sadly I won’t be playing in Melbourne this year, as I am not yet ready to compete,” said Murray, who is a five-time finalist at the Australian Open.
“I’ll be flying home shortly to assess all the options but I appreciate all the messages of support and I hope to be back playing soon.”
Murray had posted an emotional message on his Instagram account earlier this week, discussing his battle with a hip injury over the past six months. The ex-world No. 1 admits surgery is an option, but it is one he has been trying to avoid. He is yet to make a decision on his next move.
This is the first time since 2007 that Murray will have missed two consecutive Grand Slams, having also skipped the US Open last September.
Australian Open tournament director Craig Tiley wished Murray the very best for his recovery.
“We are fully aware that Andy has been going through a difficult period with his hip and that he’s done everything possible to prepare for the Australian summer,” Tiley said.
“Personally, I also know that Andy loves tennis and would do anything to play. This is a very hard decision for Andy and we totally respect it.
“We wish him the absolute best on his road to recovery and look forward to having him back in Melbourne. He is a true champion and one of our favourites.”
The 12-time Grand Slam tournament winner, who hasn’t played since a right elbow problem forced him to quit Wimbledon in the quarter-finals in July, has already had to shelve his comeback plans, cancelling scheduled appearances at an exhibition in Abu Dhabi and the season-opening Qatar Open.
But a statement on his official website said that the 30-year-old will take part in two events in Melbourne before the start of the Australian Open on January 15.
“Novak is travelling to Australia where he will take part in two exhibition tournaments. After the two events, the decision will be made about his participation at the first Grand Slam of the season, the Australian Open, where ‘Nole’ has been crowned champion six times,” said the statement.
Djokovic, now ranked 12th in the world, will play in the Kooyong Classic in Melbourne and then at the Tie Break Tens tournament at Melbourne Park, the site of the season’s opening Grand Slam.
Fellow injured star and current world number one Rafael Nadal is also due to play at the Tie Break Tennis event.
Nadal, the winner of 16 Grand Slam titles, also postponed his scheduled season start at the Abu Dhabi event and this week’s ATP tournament at Brisbane due to ongoing struggles with a knee injury.