American Williams's hopes of a sixth singles title fizzled out as she sank to a 1-6 6-3 6-4 defeat against 25th seed Alize Cornet who celebrated by kissing the Court One turf.
The result reverberated around the All England Club on a day of dark clouds and rain and blasted a gaping hole in the women's tournament which now looks wide open with second seed Li Na having departed a day earlier.
World number one Williams, 32, had not fallen before the fourth round at Wimbledon since 2005 and, after returning to court from a four-hour rain delay on day six, she seemed to charging towards the business end of the tournament.
Her power game began to malfunction and Cornet, sensing her moment, battled back with some attacking tennis to leave a strangely hesitant Williams reeling.
After watching the match slip away, Williams dug deep at the end to claw back two games to trail 4-5 but she bungled a volley to offer Cornet a match point and then netted a backhand.
"If somebody would have told me a couple years ago that I would be in second week here in Wimbledon, beating Serena, I wouldn't have believed it," Cornet told reporters.
"Before it was just a pain to come here in Wimbledon. But now it's the contrary," added the 24-year-old who has reached the last 16 of a major for only the second time in 34 attempts.
The result ended hopes of an eagerly anticipated last 16 match-up between Williams and fast-rising Canadian Eugenie Bouchard who comfortably beat fellow French Open semi-finalist Andrea Petkovic 6-3 6-4.
Williams's demise would also have been noted with more than just passing interest by fifth seed Maria Sharapova, who is chasing her second Wimbledon title, 10 years after her first, and who expected to face her nemesis in the quarter-finals.
Russian Sharapova, who has a 1-15 record against Williams since beating her in the 2004 final, took advantage of playing under the closed Centre Court roof with a 6-3 6-0 thrashing of unseeded American Alison Riske.
Germany's Angelique Kerber will now stand in Sharapova's way having beaten Kirsten Flipkens.
Williams has now lost before the quarter-finals in all three of this year's slams and time is running out on her bid to reach Steffi Graf's professional era record haul of 22 major titles.
"I think everyone in general plays the match of their lives against me," Williams, who was almost unbeatable last year when she won the French and U.S. Opens to take her glittering collection to 17, told reporters.
"So I just have to always, every time I step on the court, be a hundred times better. If I'm not, then I'm in trouble.
"It's never easy, you know, being in my shoes. But you got to be ready."
Just as in his previous two matches, Nadal offered a chink of light to an opponent before switching on the after burners to race to a 6-7(4) 6-1 6-1 6-1 win against Kazakhstan's 63rd-ranked Mikhail Kukushkin and reach the last 16.
Swiss master Federer, seeking a record eighth Wimbledon title, did not give Colombia's Santiago Giraldo time of day though, continuing his serene progress to the fourth round with a nonchalant 6-3 6-1 6-3 victory.
Federer will face Tommy Robredo after his fellow 32-year-old edged out Poland's 15th seed Jerzy Janowicz 6-2 6-4 6-7(5) 4-6 6-3 in a match ending in near darkness.
NO DANGER
While Federer has yet to drop a set, Nadal has conceded the opener in all three rounds so far, although unlike in the previous round against Lukas Rosol, whom he lost to in 2012, he never looked in imminent danger against Kukushkin.
Watched by a host of famous sportsmen and women in the Royal Box, including David Beckham and 2012 Tour de France champion Bradley Wiggins, the 14-times grand slam champion shrugged off the loss of a first-set tiebreak to rampage through the next three sets with his most impressive tennis of the week.
"When I played the first set I said that maybe the roof here in Wimbledon is not good for me," said the sun-loving Nadal whose 64 career titles include only two indoors.
"I don't like to be in closed places only with lights but I think I played a great match."
Nadal's next assignment will be Australian wildcard Nick Kyrgios after the 19-year-old beat fellow youngster Jiri Vesely in a battle of the former world No.1 juniors.
Kyrgios, cheered on by a legion of Australian fans, won 3-6 6-3 7-5 6-2 and is the first wildcard to reach the last 16 since Juan Carlos Ferrero in 2009.
Canadian Milos Raonic dropped only nine points on his serve as he reached the last 16 for the first time by beating Lukasz Kubot 7-6(2) 7-6(4) 6-2. Like Federer, and defending champion Andy Murray, dark horse Raonic is yet to drop a set.
While the weather did relent late in the day, the schedule was in tatters with two men's third round matches, Stanislas Wawrinka v Denis Istomin and Feliciano Lopez v John Isner, not starting and several others failing to finish.
Last year's runner-up Sabine Lisicki was a set ahead against Serbia's former World No.1 Ana Ivanovic when play was suspended after her heated discussion about the gathering gloom.
French Open runner-up Simona Halep did beat the weather though, and Swiss teenager Belinda Bencic 6-4 6-1.
(Editing by Pritha Sarkar)
source: www.abs-cbnnews.com
