Seventh seed Stosur, who on Monday became the first woman to beat Justine Henin at Roland Garros for six years, held off a tremendous fightback by Williams – who had match point – to win 6-2 6-7 (2/7) 8-6 and reach her second successiveRoland Garros semi-final.
The Australian made full use of her impressive physique to overpower world number one Williams for almost two sets but looked to have blown her chance after serving for the match in the second.
Yet she held her nerve in a dramatic decider to win in two hours 24 minutes on Philippe Chatrier Court.
For 2002 champion Williams, it was another quarter-final defeat at the French Open, which she had been a strong favourite to win being the only grand slam champion left in the draw.
“It was my match and I lost it. That’s basically what happened,” said the 28-year-old, who cut a frustrated figure for much of the contest.
“I didn’t play well, I don’t think at all, from literally the first point.
“I was more or less upset that I was able to play so well up until this point, and then I didn’t believe that it was over. I just couldn’t believe that I played like that.”
Williams showed her renowned fighting spirit to level at one set all and fashion a match point in the decider.
“I never think I’ve lost until I’m shaking hands,” she added.
Stosur, who lost to eventual champion Svetlana Kuznetsova in last year’s semis, will now play Jelena Jankovic today for a place in Saturday’s final.
The 26-year-old has been a revelation in the past year after finally recovering from the debilitating effects of Lyme disease which sidelined her for nine months until 2008.
Jankovic advanced to her third Roland Garros semi-final after avenging her shock US Open defeat to Yaroslava Shvedova, winning 7-5 6-4 in a topsy-turvy clash which saw 10 breaks of serve.
As the highest-seeded player left in the draw, world number four Jankovic will now be considered by many as the favourite.
In the men’s, Rafael Nadal shook off dogged resistance from Nicolas Almagro to stay on course for a fifth French Open title.
Although he maintained his record of not having dropped a set at this year’s tournament, the world number two was made to fight all the way by his fellow Spaniard before sealing a 7-6 (7/2) 7-6 (7/3) 6-4 victory in two hours and 35 minutes.
Nadal, who turns 24 today, will depose Roger Federer as world number one if he goes on to win the title.
“I’m not thinking about it,” he said.
“My objective is to make it to the final, and then if I come out number one, fine.”
Nadal faces Jurgen Melzer in the semi-final, after he saw off Novak Djokovic.
Djokovic last night refused to blame umpire Carlos Bernardes for his epic quarter-final defeat against Jurgen Melzer but hit out a the crucial call that could have saved his skin.
Djokovic threw away a two-set lead to lose a four-hour and 15-minute marathon 3-6 2-6 6-2 7-6 (7/3) 6-4 on Suzanne Lenglen Court that was as full of controversy as it was drama.
Third seed Djokovic struggled to contain his fury when a line call went against him while Melzer was serving for the match at 5-4 0-15 in the deciding set.
The Serbian was adamant his shot had clipped the line, and although Bernardes came down to check the mark on the clay, the umpire was equally convinced the ball was out.
Djokovic, who went on to save two match points before Melzer finally sealed victory, was still smarting about the call long after the match had finished.
“For somebody who is a chair umpire of so many years and years experience to make such a mistake at that point is unbelievable,” he said.
“I can’t blame him for losing this match, of course. I should have done my job earlier. That’s definitely my fault, and I paid the consequences.”