The Team Colombia High Road rider was beaten in a four man sprint on the line of the stage which finished in Santa Croce sull'Arno.
American Tyler Farrar of Garmin Slipstream became the first man to beat Cavendish in a sprint finish this season and paid tribute to the Manx man saying to Cycling News: "Cavendish is the best sprinter in the world; everyone wants to beat him."
British Rider Daniel Lloyd was 50th, Roger Hammond was 60th with Geraint Thomas 68th and Steve Cummings was 168th.
Confidis' Julien El Farès leads the General Classification.
The next two stage are mountain climbs, followed by a time trial, so it won't be until the final stage on Tuesday that Cavendish will have a chance for revenge.
British David Millar finished 33rd in the 6th stage of Paris- Nice to leave him 17th in the General Classification.