Kim Clijsters' bid to become world number one was dented when she crashed out 6-3 3-6 6-2 to Elena Dementieva at the Filderstadt Grand Prix in Germany.
The result ended a 21-match winning streak for the Belgian.
"This was the best match I ever played and will give me confidence for the future," said Dementieva, who will next play Amelie Mauresmo.
In other quarter-final action, top seeded American Lindsay Davenport edged past Anastasia Myskina 6-2 3-6 6-1.
Mauresmo beat Nadia Petrova 2-6, 6-2, 6-4 and Slovakia's Daniela Hantuchova beat Italian Flavia Pennetta 6-3 6-4.
Hantuchova, back in the top 20 after an interval of more than 18 months, was delighted with her performance.
"I am playing much more solidly," she said. "And I have a much better idea of what I am doing on court than I did."
Clijsters was aiming to topple Maria Sharapova off the top of the women's rankings and was in philosophical mood after the defeat.
"I'm not disappointed at not becoming number one," said the Belgian, who was also biddding to become the first player, man or woman, to rise from outside the top 100 to world number one within one year.
"This was the best she ever played against me, but my body wasn't up to it.
"My footwork wasn't the same as in the previous weeks and months."
Clijsters will now rest until 24 October when she plays in a tournament in her homeland.
She added: "I was getting tired and I think the rest I'm getting now is coming at the perfect time."