A vicious flying knee floored Sydney-based Hunt midway through the second round and Werdum pounced with a relentless flurry of blows which Hunt couldn’t respond to.
The referee gave 40 year old Hunt every opportunity to cover up or fight back, but was soon forced to intervene.
“I didn’t see that one, it got me,” said Hunt afterwards.
The heavy underdog going into the bout, Hunt took the fight to Werdum, dropping the number one contender several times in the opening round but letting him back to his feet each time.
Hunt is a better boxer than he is a wrestler and the only time he looked in trouble before the end of the fight was when Werdum wrapped him up on the mat in the corner of the cage.
Hunt escaped from the hold and rocked Werdum again to win the first round and maintained his composure in the second but crumpled when the Brazilian connected with a knee to the chin.
Hunt still has a few fights left on his UFC contract and remains one of the most exciting fighters in the sport.
Werdum will now face heavyweight champion Cain Velasquez.