Holder Djokovic resisted for one set before pain in his right wrist was just too much to bear for the second-seeded Serb who bowed out on the first match point after one hour 14 minutes.
"It's unfortunate that when you're playing at this level against Roger, big tournament, that you are not able to play your game because something else is taking away all your energy," said Djokovic.
"This injury that has been present for last 10 days, and I tried not to think or talk about it, I did everything I could really, I was on the medications every day, I was doing different therapies, injections."
Djokovic could not specify the exact nature of the injury.
"I had the feeling he was not finishing off his shots with as much top spin as usual," Federer told Canal Plus.
"Even at 90 per cent, Novak is still strong and you still have to take your chances in the key moments and there were some in the first set where I had tough moments."
The much-awaited clash lived up to expectations early on, with 17-times Grand Slam champion Federer saving two set points on serve at 5-4.
Federer, who has never won the Monte Carlo Masters, broke in the following game and pocketed the set with an ace before Djokovic went to his chair holding his right wrist.
The second set was a stroll for the Swiss who produced a series of forehand winners as he moved 18-16 up in his head-to-head record against Djokovic.
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