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The team blamed driver error for the accident with 22-year-old Hamilton braking late and spearing into the tyre wall at Sainte Devote, the first turn at the end of the pit straight, with half an hour remaining of the afternoon session.
The British rookie climbed out of the car and waved at the crowd as he made his way back to the team garage on a sweltering afternoon punctuated by crashes in the Mediterranean principality.
He still ended the day as the third fastest driver on the track, behind team mate Fernando Alonso and Ferrari's Kimi Raikkonen -- both former Monaco winners.
Double champion Alonso, two points adrift of Hamilton in the overall standings after four races, was quickest in both sessions and the only driver to lap the tight and twisty street circuit in under one minute 16 seconds.
The Spaniard's best lap in the afternoon was 1:15.940 after 1:16.973 in the morning.
Hamilton has been on the podium in the first four races of his Formula One career, a feat achieved by no other driver in the 57-year history of the championship, and had not put a foot wrong in any of them.
Tipped to become the first rookie to win in Monaco this weekend, he is the youngest driver to lead the world championship and has won in the principality on previous appearances in junior series.
"I think we are in good shape and, with some more fine tuning during Saturday morning practice, we are definitely looking forward to a competitive weekend," said Alonso, last year's winner with Renault.
BAD START
Hamilton has been on the podium in the first four races of his Formula One career, a feat achieved by no other driver in the 57-year history of the championship, and had not put a foot wrong in any of them.
Tipped to become the first rookie to win in Monaco, he is the youngest driver to lead the world championship and has won in the principality on previous appearances in junior series.
However a starter motor failure sidelined him for much of the morning with mechanics having to remove the car's floor to extricate a piece of debris from the gearbox.
That cost him time he would otherwise have used to assess tyre choices and team boss Ron Dennis said his driver was perhaps over eager to get back up to speed.
"This is a mistake that all drivers make at all standards...I'd rather it was in a practice session where he is finding the limits of the car than in a qualifying where it takes a penalty on the grid or hampers his race," he said.
"Finding the limit at this circuit is challenging for any driver. I'd rather not have a bent racing car but in the circumstances we're pretty comfortable with his contribution to the season.
"He's got a few brownie points still in hand."
Both sessions were red-flagged to allow marshals to remove stricken Spykers -- Dutchman Christijan Albers who pulled over near Tabac in the morning and German rookie team mate Adrian Sutil who crashed in the afternoon exiting the hairpin before the tunnel.
Italian Giancarlo Fisichella, whose Renault looked far more competitive on the slowest circuit on the calendar, was fourth fastest in the morning before crashing at the same place as Hamilton.
The impact damaged Fisichella's car and forced him to continue afternoon practice in team mate Heikki Kovalainen's intended race car because the Finn was already using the spare.
Germany's Ralf Schumacher smashed his Toyota into the barriers at the exit to the swimming pool complex at the end of the second session. Italian team mate Jarno Trulli was fourth fastest.
