"This is not doing our sport any good," McEnroe said from his courtside commentary box.
"What's he's giving, 80 per cent? ... This is Wimbledon, centre court; you've got to give 110 per cent to try to get back into it.
"I tell ya, this is hard to take a whole lot of positives out of this. "It's not just the mental part, he needs to work on his game.
"He doesn't know what it takes to be a top-10 professional to win grand slams.
"I'm hoping he sees the writing on the wall before this becomes chronic, irreparable, because to me it's getting to that point.
"He's got as lot of thinking to do, a lot of work to do." McEnroe urged the coachless Kyrgios to appoint a fulltime mentor to help the firebrand fulfil his "God-given talents" before his career slipped away, saying "this would be an important time for his parents to look him in the eye" and ask what the 21-year-old wanted out of tennis.
"It's a damn shame when he does this. It makes no sense whatsoever," McEnroe said.
"He's got to take responsibility for what's going on."
Kyrgios later addressed his performance admitting he was "soft" and "pathetic."
"It was a good first set," Kyrgios said. "The rest of the match was pretty pathetic.
"I was really comfortable out there the first set., thought I was playing some really good tennis. I believed that I could win the match.
"As soon as I lost the first set, I just lost belief. Obviously felt like a mountain to climb after losing the first."
Conceding he is not fully applying himself, Kyrgios said: "Just a little soft still. I think when things get tough, I'm just a little bit soft.
"I've got experience, but it ultimately comes down to just laying it all out there and competing for a long time. I didn't do that today at all."
One of the few players operating without a coach, Kyrgios also reaffirmed he "doesn't love tennis" and said his commitment to the sport wavered.
"One week I'm pretty motivated to train and play," he said.
"I'm really looking forward to getting out there. One week I'll just not do anything.
"I don't really know a coach out there that would be pretty down for that one."
There was no telling the much-hyped centre-court showdown would be so one-sided as the pair played cat and mouse for much of the first set as neither was able to make any inroads on their opponent's serve.
Out of the blue, though, Murray conjured three set points after luring Kyrgios to the net before cracking a scorching backhand crosscourt winner to have the Australian down 5-6 and love-40.
Kyrgios saved two of the set points with monster serves, but surrendered the set with a forehand volley into the net.
The miss proved the beginning of the end for Kyrgios. He fell 15-40 behind with backhand errors serving at 1-2 in the second set.
Murray again goaded Kyrgios' forehand to induce a backhand volley error from his challenger to break for 3-1. He then raced through the set to take a stranglehold on the match. "He's not even on the court mentally. He's snapped," McEnroe said. "It looks like Kyrgios doesn't really want to be out there."
Kyrgios didn't even sit down at the changeover after dropping serve to trail 2-1 in the third set as Murray moved in for the kill.
