Muguruza’s 4-6 6-4 6-4 victory marked the ninth consecutive time Kerber has failed to beat a top-20 opponent.
The 29-year-old is also unsure whether she will be fit to play in the Eastbourne event that precedes Wimbledon as she continues to struggle with the left hamstring strain
She lost out on Wednesday
The United States player Serena Williams was at second spot with 7,010 points, followed by Czech Karolina Pliskova with 6,020
The withdrawal also cost Williams a chance to retain her top ranking
Serena overcame a shaky start to land an unprecedented seventh Open title and open-era record 23 grand slam singles crown with an emotional 6-4 6-4 triumph on Saturday
The 35-year-old American served up 10 aces and thumped 25 winners over 75 minutes on Rod Laver Arena to join sister Venus in the last four, where she will play 34-year-old Croatian Mirjana Lucic-Baroni
He went on to become the first player to win two Olympic singles gold medals when he retained his crown in Rio de Janeiro in August.
"(It) will be for the first time... that I will play her as a number one, which is a little bit different. But I think if I'm on the court, I don't really think about that," she told reporters
The opening game proved to be a nervous one for Pliskova, who produced a couple of early faults to give Kerber the chance to break, which the German eventually took when her Czech opponent fell prey to a broken string
After witnessing Serena Williams lose to Karolina Pliskova, Kerber was aware that victory over her Danish opponent would see her overtake the American in the standings but she showed little nerves on the Arthur Ashe Stadium court
The fourth seed will be aiming to become the first German woman since Steffi Graf 20 years ago to lift the Wimbledon singles crown
Top-seed Williams came into the match as heavy favourite and had also won the last four meetings between the two without dropping a set, but the American made 20 unforced errors in a wobbly opening set