Karolina Pliskova defeated Williams 6-4 4-6 7-5, the second time the Czech has toppled the legendary American at a major, after the 2016 US Open.
During that event, the former world No. 1 downed both Williams and older sister Venus.
Williams led 5-1 in the third set Wednesday but the complexion changed completely when she turned her ankle on her first match point in that seventh game.
She immediately double faulted thereafter and her serve altogether waned.
Williams had looked sharp throughout this fortnight, too, breezing through three rounds before beating current world No. 1 Simona Halep in a high-quality, three-set tussle Monday.
Losing in the last eight at a major is exceedingly rare for Williams — she had been 14-1 at this stage in her last 15 grand slam appearances.
But her last loss came here in Melbourne in 2013, ousted that day by Sloane Stephens when back and ankle injuries hampered her progress.
Overall it was Williams’ earliest departure at a grand slam — not including a withdrawal — since a third-round showing at Wimbledon in 2014.
Returning to action last year after giving birth to daughter Alexis Olympia in September 2017, Williams impressively made finals at Wimbledon and the US Open, falling to Angelique Kerber and Osaka, respectively.
When Williams and Osaka met in the final in New York in September, it turned out to be one of the most memorable grand slam finals in recent history.
And not for the forehands and backhands on display.
Williams accused chair umpire Carlos Ramos of sexism and called him a “thief” in her straight-set loss.