The 29-year-old, equal-fifth fastest qualifier in 1 minute 49.16 seconds going into the semi-final, finished sixth in his race with 1:49.91.
Just 12th fastest, he is out of the eight-man final.
"I'm terribly disappointed with that," Thorpe said. I thought I could and I thought I would swim a lot quicker, much quicker," Thorpe said. "The fairy tale has descended into a nightmare."
Ryan Napoleon, who won Thorpe's heat, is the fastest qualifier for the final with 1:48.27.//DPA