Osaka would have guaranteed holding onto top spot going into Wimbledon by reaching the final at the Edgbaston Priory Club but she was badly out of sorts in a 6-2 6-3 loss to Yulia Putintseva.
The Japanese star is still learning how to play on grass and never looked happy or comfortable on Friday, bizarrely choosing to sit on the court instead of her chair at changes of ends.
Kazakh Putintseva was 5-0 up in the first set and though the top seed threatened a comeback on a couple of occasions, there were simply too many errors coming off her racket and a final drop shot from Putintseva gave her the best win of her career.
The emotions were very different for French Open champion Barty, who extended her winning run to nine matches to ease into the quarter-finals.
The rain, which delayed the start of the match and then interrupted proceedings again early in the second set, was the only thing holding up the second seed in a 6-3 6-1 victory over Jennifer Brady.
American Brady has been in good form, reaching the semi-finals in Nottingham last week, but she was no match for Barty.
“I felt like it was a little bit better than it was yesterday,” said the Australian. “Particularly on my service games, I felt like I was able to look after them a lot better, play the first couple of points in those games well and get my nose in front.
“Overall, a really clean match. I’m pretty happy to come away with it with the couple of delays we did have.”
Barty’s first two matches in Birmingham have proved that she still knows her way around a grass court despite her unexpected success on clay, and in many ways it would be a surprise if she does not go on to claim the title and the number one ranking.
“The stars have aligned a little bit for me and I think when you get those opportunities you have to do your best to take them with both hands,” she said.
“That’s what we have been able to do over the last month in particular but I feel like I’m comfortable in my own skin. I feel like I know exactly how I want to play in most matches, and it’s just about going out there trying to execute as best I can.”
Barty’s reward is a quarter-final showdown with five-times Wimbledon champion Venus Williams after she dispensed with Wang Qiang in straight sets.
The American, playing her first grass court tournament away from SW19 since 2011 as a wildcard entry, broke her Chinese opponent four times on the way to a 6-3 6-2 victory.
Williams raced into a 3-0 lead and closed out the first set with the minimum of fuss, and the trend carried on in the second as she went 5-0 ahead only to falter temporarily when serving for the match before taking it 6-2.
Williams said at her post-match press conference: “I think just the focus today was really there. That was great.
“My opponent, she also played well, too. It was nice to be able to have answers for her play. I had some fun on the court.
“[Barty] is playing well on the grass, too. It’s not easy to get to these quarter-finals. No match is easy, so I’ll have to have a feel for it tomorrow and see what works.”