The 21-year-old was regarded as one of Britain's main medal hopes in Zurich, but she appeared to get her tactics wrong as she finished sixth in her heat, with only the top four guaranteed progression.
"That's pretty gutting. I knew it was going to be tough but I thought it should be more straightforward," the Scot told BBC Sport.
Muir, who claimed a bronze medal at the Under-23 Championships last year, has run the third-fastest time in Europe this year.
Meanwhile, there was more positive news where Laura Weightman was concerned after she finished fourth in her heat to qualify for the final. The Commonwealth Games silver medallist will be joined in the race by fellow Brit Hannah England, who advanced as a fastest loser with a time of 4:10.73.