This was Williams’ fourth appearance at the tournament in the last decade and she had won the title on all three previous visits, beating Alize Cornet in the final last year.
But the eighth seed was well beaten in her third-round clash with Lucie Safarova, the Czech prevailing 6-4 6-2.
Safarova, who reached her first grand slam semi-final at Wimbledon last year, said on court: “It was really an amazing match from my side.
“I felt great on the court and my tactic was to play fast and come forward whenever I could, which was really working today, and I’m happy to get the win.”
In the quarter-finals Safarova will meet countrywoman Karolina Pliskova, who continued her fine start to the season by upsetting fourth seed Ana Ivanovic 6-2 4-6 6-4.
Wimbledon champion Petra Kvitova and fifth seed Agnieszka Radwanska were also dumped out, leaving sixth seed Ekaterina Makarova as the highest-ranked player definitely through to the last eight.
Kvitova was another player who threatened a comeback but Carla Suarez Navarro won the final three games to triumph 6-3 4-6 6-3 while fellow Spaniard Garbine Muguruza eased past Radwanska 6-4 6-2.
Makarova was the only higher-ranked player to win a day session match on Wednesday, seeing off Zarina Diyas 6-3 6-4. Italy’s Flavia Pennetta continued to put her disappointing start to the season behind her with a 6-2 3-6 6-1 victory over seventh seed Angelique Kerber.