The number of travellers fell across the German airline's global network, with the biggest drops in its European and American routes, and it lagged rivals who carried more in the month.
Passenger traffic, a figure which takes account of both the number of passengers and the distance they travelled, rose slightly in October, up 0.6 percent.
Lufthansa said in a statement its October traffic figures compared with record levels a year earlier.
But it lagged a 6.4 percent increase in October traffic at British Airways (BA) and an 8.9 percent rise at larger competitor Air France KLM. BA also carried 2.2 percent more passengers in October, while Air France KLM saw a larger increase of 5.3 percent.
Europe's biggest low-cost carriers, Ryanair and easyJet, reported gains of 23 percent and 14 percent respectively in passenger numbers for October.
"Both (traffic) and the number of passengers fell below our forecasts," said LRP analyst Per-Ola Hellgren. "The disappointment is particularly big because the results from BA and Air France had awoken hopes of a good month."
Lufthansa's overall passenger load factor - which measures the average number of seats sold as a proportion of seats available - declined 0.8 percentage points in October to 74.7 percent, the first monthly slip since May.
The German airline also reported the largest monthly drop this year in the amount of cargo and post carried by its Lufthansa Cargo division. The figure fell 4.3 percent to 157,000 tonnes.
Lufthansa will be expected to give more details about traffic development at its passenger and cargo airlines on Thursday, when it is due to publish third-quarter earnings. Some analysts also expect it to raise its 2005 profit forecast.
Operating profit is expected to rise to 231 million euros ($271 million) for the quarter, up from 218 million a year ago, according to the average of 13 analysts' forecasts in a Reuters poll. Sales are expected to rise to 4.72 billion euros from 4.47 billion.