The 40-year-old American, a seven-times Grand Slam winner and twice finalist at Melbourne Park, suffered a 1-6 0-6 defeat.
Browsing: Bianca Andreescu
Also, world number three seed Naomi Osaka cruised past Russian Anastasia Pavlyuchenkova 6-1 6-2.
The win was an upset which also put the brakes on the American’s bid to equal the all-time record
Canadian teenager Bianca Andreescu crushed two-times Grand Slam champion Garbine Muguruza 6-0 6-1 to advance to the semi-finals of the BNP Paribas Open at Indian Wells on Wednesday.