World No. 1 and defending champion Caroline round upset victim Wednesday at the $2.05 million Pan Pacific Open tennis event.
Kaia Kanepi of Estonia outlasted Wozniacki 7-5, 1-6, 6-4 on the hardcourts at Ariake Colosseum.
Kanepi will play Poland's Agnieszka Radwanska in Thursday's quarterfinals. The ninth-seeded Radwanska took down 2009 Tokyo runner-up Jelena Jankovic of Serbia 2-6, 6-4, 6-0.
Wimbledon runner-up Maria Sharapova beat 13th-seeded German Julia Goerges 7-6 (7-4), 7-6 (7-4).
The second-seeded Sharapova, who titled here back in 2005 and 2009, will next face fifth-seeded Petra Kvitova of the Czech Republic in a rematch of this year's Wimbledon final.
Kvitova defeated American Vania King 6-1, 7-6 (7-4) to advance.
Belarusian Victoria Azarenka, the No. 3 seed, got past Klara Zakopalova of the Czech Republic 6-3, 7-5.
Azarenka will next do battle with seventh-seeded Marion Bartoli of France, who cruised to a 6-2, 6-1 victory over 10th-seeded Peng Shuai of China.
Former U.S. Open and Wimbledon runner-up Vera Zvonareva of Russia handled Iveta Benesova of the Czech Republic 6-1, 6-2.
The fourth-seeded Zvonareva will face Russian Maria Kirilenko in Thursday's quarterfinals. Kirilenko upset 12th-seeded Ana Ivanovic of Serbia 6-3, 6-1.
The 2011 Pan Pacific champ will collect $360,000.