While Underwood has won the award six times in the last nine years, her "Smoke Break" video could not make the cut against McGraw's "Humble and Kind," which saw footage from an Oprah Winfrey television series.
The singer did take home the CMT Award for best Female Video of the Year, however.
To open the awards show, actor and country star Billy Ray Cyrus took the outdoor Broadway stage in Nashville with rock group Cheap Trick, delivering an energetic performance of Elvis' "Don't Be Cruel" and the band's "Surrender."
Cyrus makes his return to the CMT Awards after about eight years, since he co-hosted with daughter Miley Cyrus. The comeback may be linked to promote the actor's CMT series Still The King, in which he is a washed-up country singer and Elvis impersonator.
Other performances of the night included The Voice coach Blake Shelton with the Oak Ridge Boys, a Merle Haggard tribute by Dierks Bentley and pop collaborations featuring Little Big Town, Pharrell, Pitbull and Leona Lewis.