With the scores level at 8-8 in the final set, Argentinian Nalbandian was keen to challenge a call from the umpire that said Isner's shot had landed in.
However, when he asked to challenge, Nalbandian was told that he had left it too late. He went on to lose the set and the match 10-8.
"I asked for HawkEye and he make an overrule because the line judge had called out," Nalbandian told reporters. "[The umpire] overruled it.
"I said, okay, I see the mark. It wasn't a big deal so I decided to challenge it.
"He didn't want to do it."
Nalbandian had previously reached the semi-finals in Melbourne back in 2006.