The defending champion failed to close out a see-saw third set Monday, dropping the last four games against Sabine Lisicki of Germany to lose 6-2, 1-6, 6-4 in the fourth round and end her career-best 34-match winning streak.
"I'm still shaking," Lisicki said in a post-match interview, covering her face with her hands to wipe away tears. "I'm just so happy."
It was the latest in a string of upsets that has jolted the tournament, with defending champion Roger Federer and Rafael Nadal knocked out in the first three days -- along with Maria Sharapova and Victoria Azarenka on the women's side.
Williams looked to be cruising after dropping the first set, winning nine straight games to take a 3-0 lead in the third. The players then traded breaks to give Williams a 4-2 lead, but the American couldn't win another game -- despite having four break points at 4-3.
Those would have given her a chance to serve for the match. Instead, Lisicki held, broke again, and converted her second match point with a forehand winner.
Lisicki reached the semifinals at the All England Club in 2011 but this will rank as arguably her biggest victory at the grass-court Grand Slam. It was also the fourth straight time Lisicki has eliminated the reigning French Open champion during her Wimbledon run, having missed the tournament in 2010.
"Serena played a fantastic match," Lisicki said. "She's such a tough opponent. Just an amazing feeling to win this match."
Britain's Laura Robson also lost. She couldn't recover from her missed chances in the first set and fell 7-6 (5), 7-5 to Kaia Kanepi of Estonia, failing to become the first British woman in the quarters of any Grand Slam since 1984. Kanepi will face Lisicki in the quarterfinals.
Former champion Petra Kvitova and No. 4 David Ferrer also advanced. Top-ranked Novak Djokovic and No. 2 Andy Murray, about the only pre-tournament favorites still standing, played their fourth-round matches later.
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