Trailing for most of the Round of 16 match, Gregory made par on No. 17 to even it up. But at the par-4 18th, Gregory made his second bogey of the round, a fatal mistake which cost him the match.
In the morning, Gregory defeated David Noll Jr., of Dalton, Ga., 2 and 1 in his morning match.
Knapp of Oakmont, Pa., advances to today's quarterfinals. The winner of the event will receive an invitation to the 2009 Masters Tournament.