World number seven Guillermo Coria was upset by Spaniard Ruben Ramirez Hidalgo 7-5 6-2 in the Copa Telmex ATP tournament in Buenos Aires.
Lucky loser Ramirez Hidalgo will meet compatriot Carlos Moya in the quarter-finals after the former world number one beat Chile's Nicolas Massu 4-6 6-3 7-6.
Second seed Coria, the Buenos Aires champion in 2004 when he beat Moya in the final, suffered from a string of double faults and unforced errors on his returns in Wednesday night's match.
The world number seven, tournament favourite after compatriot David Nalbandian pulled out through injury on Monday, has been out of form this year and was overlooked by Argentina for their Davis Cup match against Sweden last weekend.
"All I can do is say sorry, what I showed on court was not at all nice," Coria, French Open finalist in 2004, told reporters.
Fifth seed Moya, winner in 1995 and 2003, is now favoured to take his third title in Buenos Aires after beating Olympic champion Massu.
