Pavic downed the sixth-seeded former French Open champion 6-2, 6-2 on the clay courts at ATP Stadium.
Ferrero titled in Umag in 2010 after finishing second in 2009.
Another seeded player went down Tuesday as American Wayne Odesnik bounced No. 8 seed Edouard Roger-Vasselin of France 6-7 (4-7), 6-2, 7-5.
Slovenian Blaz Kavcic, Italians Fabio Fognini and Potito Starace, and Argentine Marco Trungelliti also nailed down first-round wins.