The world No.24 Australian was outplayed 6-3 6-2 on Tuesday, Arnaldi moving to 3-1 in their career head-to-head in the process.
Popyrin will be seeded for the first time at next month's Australian Open after a 2024 headlined by his Masters 1000 triumph in Montreal and upset of Novak Djokovic to reach the fourth round of the US Open.
He has a game Australian tennis great John Newcombe thinks can carry him into the world's top-10 next year.
But the Italian world No.37, two years Popyrin's junior at 23, demonstrated just how competitive the field was in a 68-minute procession.
Australian world No.93 Adam Walton then pushed fifth-seeded American Frances Tiafoe, who saved set points in the first set before turning the tables in a 7-6 (7-5) 6-3 victory.
Adam Walton put up plenty of fight but was beaten by American Frances Tiafoe. (Jono Searle/AAP PHOTOS)
Day two began with the withdrawal of fifth seed and world No.22 Sebastian Korda (lower back), the American to be replaced in the main draw by Dusan Lajovic.
A stacked men's schedule will continue on Tuesday with Nick Kyrgios against up-and-coming French talent Giovanni Mpetshi Perricard, while Novak Djokovic begins his campaign against Australian Rinky Hijikata in the twilight session.
Kyrgios looked sharp in his return from a long injury lay-off in a doubles win with Djokovic on Monday night.
Aleksandar Vukic and Jordan Thompson have already assured an Australian second-round presence after impressive victories in Brisbane.
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