Serena Williams' quest for an 18th career singles Grand Slam title will have to wait a few more months. The world No. 1 will have to start a new winning streak too.
The 14th-seeded Ivanovic ended Williams' 25-match winning streak and dealt the American a shocking early exit.
Ivanovic, who was the runner-up in Melbourne in 2008 and was the French Open champion later that year, took advantage of 31 unforced errors from Williams.
"It's not easy playing such a champion and I've never beaten her before," Ivanovic said during an on-court postmatch interview.
Before this match, Ivanovic had lost all four previous matchups against Williams. In fact, she hadn't taken a set against her, but that all changed at Rod Laver Arena.
A five-time Australian Open champion, Williams lost for just the second time in 53 matches at the event when winning the first set. Her only previous defeat came last year in the quarterfinals to Sloane Stephens.
Fourth seed Li Na of China bested 22nd-seeded Russian Ekaterina Makarova, 6-2, 6-0 in 59 minutes. Li, who lost to Victoria Azarenka in last year's finale in Melbourne, will face Italian Flavia Pennetta in the quarterfinals.
The 28th-seeded Pennetta, who did not play the 2013 Australian Open due to a wrist injury. upended No. 9 seed Angelique Kerber of Germany, 6-1, 4-6, 7-5. This is Pennetta's first quarterfinal appearance at the Aussie Open, but her second straight such showing in a Grand Slam tournament. Pennetta, who fired eight aces, was ousted by Azarenka at the 2013 US Open semifinals.
Since 1999, only one German player has advanced to the Australian Open quarterfinals. That was Andrea Petkovic in 2011.