Andy Murray was denied his 20th successive win on grass when he was beaten 7-6 (10), 6-2 by Radek Stepanek in the third round at Queen's Club on Thursday.
Murray, the defending champion and No. 3 seed, claimed his first ATP title at Queen's in 2005 and went on to win the Wimbledon warm-up tournament three times.
But he failed to take advantage of eight set points after leading the first-set tiebreaker 6-2, and Stepanek survived to convert with his second set point.
A break to lead 1-0 in the second set put Stepanek firmly on the road to victory, and a further break to lead 5-2 left him serving for only his second win over Murray in seven meetings.
Murray's last defeat on grass was against Roger Federer in the 2012 Wimbledon final. Since then, he had won the 2012 London Olympics which was played at Wimbledon, and the 2013 Queen's and Wimbledon titles.
Second-seeded Tomas Berdych overcame solid resistance from Frenchman Adrian Mannarino, winning 7-6 (2), 6-4.
Mannarino fought off 17 break points, including four set points at 6-5 in the first set, before Berdych broke on his 18th break point to lead 2-1 in the second.
Berdych will next face Feliciano Lopez after the Spanish left-hander defeated Frenchman Kenny De Schepper 7-6 (3), 6-7 (4), 7-6 (3) in a match with no breaks of serve.
There were victories, too, for fourth-seeded Grigor Dimitrov of Bulgaria, who defeated Edouard Roger-Vasselin of France 7-6 (3), 6-4, and seventh-seeded South African Kevin Anderson who edged Ukraine's Sergiy Stakhovsky 6-3, 3-6, 7-6 (4).