Defending Wimbledon champion Angelique Kerber wilted on Court Two as she blew a one-set lead to bow out against lucky loser Lauren Davis.
The German, a surprise absentee from the main show courts due to a packed schedule, took the opening set 6-2.
But Kerber won just three more games as American Davis, beaten in qualifying but handed a second chance in the main draw, won 2-6 6-2 6-1 to knock out the fifth seed.
"I was trying to find my game the whole match," she admitted. "I was not really feeling good from the beginning. I don't know why. I mean, the energy was not there.
"She played good. She played very well in the last set, as well. I tried. She is also a really tricky opponent. She played a lot of slice. She moved good in the third set.
"Of course I'm disappointed. It's not the way I would like to finish here or to play here. But you have sometimes days like that. You have to accept it. You have to learn from it, trying to forgot this as soon as possible."
Serena Williams recovered from dropping the opening set to show glimpses she is getting back to her best against Kaja Juvan.
The seven-time winner, who has been injured for much of this year, found her range at the start of the second set and went on to beat the 18-year-old Slovenian 2-6 6-2 6-4.
"I just have to remember that I'm best at closing matches, I'm good at it," Williams said.
"I just have to keep the mind frame of where am I, what do I do mentally to close matches. I have to kind of just shut my eyes and get there.
"Like I keep saying, it's just experience and match play. In the past two years I haven't played a lot of matches. I'm just trying to kind of get that back."
World number one Ashleigh Barty swept past Alison Van Uytvanck 6-1 6-3.
The Australian will face Harriet Dart, who was joined in round three by fellow Brit Johanna Konta, a straight-sets winner against Katerina Siniakova.
Sloane Stephens awaits British number one Konta, the American ninth seed dropping just two games against China's Wang Yafan.
Two-time champion Petra Kvitova is through after a straight-sets win over Kristina Mladenovic of France.
The Czech sixth seed triumphed 7-5 6-2 in an hour and 25 minutes on Court One.
Fourth seed Kiki Bertens came from a set down to beat American Taylor Townsend 3-6 7-6 (5) 6-2.