The 29-year-old was a set up as he went into a second-set tiebreak in the ascendancy against Tallon Griekspoor on Sunday only for the Dutchman to fight back to win 6-7 (4-7) 7-6 (7-3) 6-3 in front of his cheering home fans.
For Thompson, it was a similar despondent conclusion to his only previous visit to an ATP final at this same tournament in 2019 when he ended up losing in straight sets to Frenchman Adrian Mannarino.
This time, things looked much more promising for the Australian grass-court specialist as he drew first blood against world No.38 Griekspoor, who had already knocked out two other Australians, Alex de Minaur and Alexei Popyrin, en route to the final.
Thompson had high hopes, especially after getting the better of Griekspoor in their only previous meeting on a hard court at last-year's Davis Cup quarter-final tie between Australia and the Netherlands in Malaga.
And after a long wait to get on the court following rain delays and a marathon women's final, world No.103 Thompson created the only two chances in the opening stanza to crack his opponent after they'd had an early exchange of breaks.
In the tiebreak, Thompson kept his nerve to prevail after seeing a 4-0 lead disappear and when he fought back to break Griekspoor when the Dutchman was serving for the second stanza at 5-4, it seemed as if he had grabbed the initiative.
But Griekspoor, who reckoned it was a lifetime dream to win a tournament on home turf, controlled the subsequent tiebreak and earned the sole third-set break in the sixth game before going on to win in two hours 37 minutes.
The disappointment for Thompson, who had reached a semi-final the previous weekend at a grass-court Challenger event in Surbiton, will have been offset by the fact that he's moved into the top-100 again and will start his next event at Queen's Club this week back at No.76.
In the London event, Thompson will open up against former Wimbledon finalist Milos Raonic, who he beat earlier in the week in 's-Hertogenbosch.
On Sunday, Popyrin missed his chance to make the main draw at Queen's when he was beaten in qualifying by Frenchman Arthur Fils 5-7 7-6 (7-2) 7-6 (7-3).
Unseeded record five-time champion Andy Murray faces a tough opening match in the main draw against Australian world No.18 Alex de Minaur on Tuesday.
Elsewhere, in the German tournament at Halle, Nick Kyrgios, a semi-finalist last year, will be hoping for a dramatic improvement in his comeback following his hobbling, first-round exit to a grass-court novice in Stuttgart.
The Wimbledon finalist will face a testing opener against Italian Lorenzo Sonego, the world No.41 on Tuesday.
