Li, the 2011 champion, went down 7-5, 3-6, 6-1 to the 103rd-ranked blonde Frenchwoman, the Roland Garros junior champion in 2009, to suffer her first opening round defeat in Paris in eight visits.
The 2hr 06min loss on a windswept and chilly Suzanne Lenglen court saw Li undone by 37 unforced errors.
Mladenovic, who was Australian Open mixed doubles champion this year with Daniel Nestor, goes on to face Alison Riske of the United States for a place in the third round.
"I don't have the words to describe what just happened. To beat the world number two in the first round at Roland Garros, it's incredible. Without the crowd, I could not have done it."
Li's shock defeat means that both Australian Open champions have been knocked out in the first round after Stan Wawrinka's listless defeat on Monday.
Also making an early exit on Tuesday was Bulgarian men's 11th seed Grigor Dimitrov who lost 6-4, 7-5, 7-6 (7/4) to giant Croat Ivo Karlovic.
Karlovic fired 22 aces and wasn't broken by Dimitrov who won the Bucharest claycourt title this spring and was a semi-finalist at the Rome Masters.
Romanian fourth seed Simona Halep reached the second round with a 6-0, 6-2 win over Russia's Alisa Kleybanova and next plays Heather Watson of Britain.
The 22-year-old Halep, the winner of seven career titles and a runner-up to Maria Sharapova at the Madrid Open claycourt event this season, raced into a 6-0, 5-0 lead before Kleybanova stopped the rot.
But the Russian, ranked 87 in the world and playing in Paris for the first time since 2010 after undergoing cancer surgery, was eventually undone by her 32 unforced errors as Halep wrapped up victory in 56 minutes.
"But I stayed focused after two games lost, and then I served really well.
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