The Australian qualifier battled hard before succumbing 7-5 6-3 at Flushing Meadows on Friday (Saturday AEST).
Hon had reached the last 32 of a grand slam for the first time after winning three qualifying matches just to make the main draw in New York.
Her rewards for adding the prized scalps of Russian world No.20 Liudmila Samsonova and higher-ranked Frenchwoman Leolia Jeanjean are a rise to a career-best No.106 and a life-changing $US237,000 ($A363,000) pay day.
The 26-year-old would have been dreaming for more after rallying back from 3-0 and 5-2 down to level the opening set at 5-5 against Li.
But, spurred on by the home support, Li raised her game to take the set, then reel off three straight games to clinch the match in one hour and 45 minutes.
Hon's departure leaves 15th seed Daria Kasatkina as the last Australian standing in the women's singles draw.
Kasatkina plays two-time Open champion and former world No.1 Naomi Osaka on Saturday (Sunday AEST) for a place in the last 16.
World No.8 Alex de Minaur is the lone Australian left in the men's singles.
He faces German Daniel Altmaier in the fourth round on Saturday (Sunday AEST).
13°C