Victoria Azarenka suffered a three-set defeat by Italy's Camila Giorgi on her return from injury in Eastbourne.
Giorgi, the world number 42, won 4-6 6-3 7-5 in two hours and 47 minutes at the Aegon International.
It was Azarenka's first match since March and only her second since January as she has struggled with a foot injury.
Giorgi goes on to face Johanna Konta after the Briton beat Switzerland's Belina Bencic 6-3 6-2.
Heather Watson fought back to beat world number 37 Tsvetana Pironkova 3-6 7-5 6-2, but James Ward lost 6-3 6-2 to American Donald Young.
Azarenka, 24, had accepted a wildcard into what was only her fourth tournament of 2014, and she will head to Wimbledon having played just 11 matches this year.
"You don't have any more tournaments, so you've just got to go with it," said Azarenka.
"That's what I have, so the important thing is that I got at least one match under my belt. I tested myself in competition, and that's what I came here for.
"I have a few days to work on things that I took out from today. We'll see how it goes."
Asked about playing for nearly three hours on her comeback, she added: "That's exactly what I wanted.
"I wanted to have a competitive match. I wanted to test myself, to play for a long time, see how my body is going to react."
The Belarusian came back from 4-2 down to win the first set but could not shake off a determined Giorgi, who has already beaten top-10 players Dominika Cibulkova and Maria Sharapova this season.
In a tense final set, Giorgi's coach and father, Sergio, was asked to be quiet by umpire Alison Lang, and he celebrated wildly after Azarenka double-faulted to drop serve a few games later.
His daughter could not capitalise on the opportunity, dropping serve to love, but she regained the initiative in an epic game to move 6-5 in front.
Given a second chance to close out the match, the Italian double-faulted for the 17th time but held her nerve sufficiently to claim one of the best wins of her career.
"It was a good match," said Giorgi. "Even though I was making some mistakes, all the match I think was consistent.
"I lost my serve in the first and the second set, too. This wasn't the point, the serve. It's normal. Sometimes you make some mistakes, but it's not about the serve."
Konta earlier closed in on a top-100 place for the first time in her career after an impressive win over Bencic.
The 17-year-old Swiss is the reigning Wimbledon junior champion and ranked 37 places higher than Konta at 72 in the world.
"I knew going into the match that Belinda was in good form," said Konta, 23.
"She had obviously won three matches here having to qualify. She's had a great year so far."
Second seed Petra Kvitova beat fellow Czech Lucie Safarova 6-1 5-7 7-6 (7-4) after failing to serve out the match in the second set.