Serena Williams, who indicated this week she is in the home stretch of her storied tennis career, fell 6-2, 6-4 to Belinda Bencic in the second round of the WTA Toronto Masters on Wednesday.
Switzerland's Bencic, the Olympic gold medallist in Tokyo last year, broke the 23-time Grand Slam champion twice in the first set and once in the second to repeat a 2015 semi-final victory over Williams in Toronto.
She needed five set points to pocket the opener, but the second set went more smoothly and she wrapped up the victory in front of a vocal pro-Williams crowd in just over an hour and a quarter.
Williams, who turns 41 next month, had beaten Spain's Nuria Parrizas Diaz on Monday for her first singles victory since the 2021 French Open, 14 months ago.
She revealed in an essay in Vogue magazine and an Instagram post on Tuesday that "the countdown has begun" to her retirement from the sport.
Williams hasn't specified an actual retirement date but is expected to compete next week in Cincinnati before travelling to the US Open, which starts on August 29.
She has lifted the US Open title six times.
Williams was emotional in her on-court remarks to the crowd, saying it had been an "interesting" week.
Bencic called the night "special."