British teenager Emma Raducanu was knocked out of the Australian Open 6-4, 4-6, 6-3 by Montenegro's Danka Kovinic on Thursday.
The US Open champion was hampered by a blistered racket hand from early in the first set of a tense contest but showed great fighting spirit to take the match to three sets.
Raducanu's defeat marks the first time she has been defeated in a completed match at a Grand Slam, with her only previous loss coming when she pulled out with breathing difficulties against Ajla Tomljanovic in the fourth round of Wimbledon.
The 19-year-old, making her debut at Melbourne Park, looked on track to continue her remarkable Slam record when she raced to a 3-0 lead in the opening set against Kovinic.
But the 17th seed then lost five games in a row and needed a medical timeout for treatment on her right hand. Despite battling back she couldn't stop Kovinic winning on Margaret Court Arena.
The result put Kovinic, the world No 98, into the third round of a major for the first time.
She will now play either two-time Grand Slam winner Simona Halep, seeded 14, or Brazilian Beatriz Haddad Maia for a place in Round 4.
“I really enjoyed it out there. It was a nice experience to play Emma and make it to the third round of a Grand Slam for the first time,” she said. “Emma is a such a talent and just glad I showed I can play at her level.”
It was only Kovinic's fourth win over a top-20 player and the first on hardcourts, with the other three all on clay.