Ivanovic, the fifth seed, was dumped by qualifier Lucie Hradecka in the opening round of the year's first Grand Slam at Melbourne Park, which often proves a minefield for players short of match practice after the off-season.
Fellow seeds Angelique Kerber (9), Svetlana Kuznetsova (27) and Sabine Lisicki (28) were also among the day-one casualties, while China's Peng Shuai (21) and Carla Suarez Navarro (17) negotiated their way through.
Ivanovic's humiliating 1-6, 6-3, 6-2 loss to Hradecka of the Czech Republic was a disaster for the Serb, who won her only major at the French Open in 2008.
She was hoping to re-establish her Grand Slam credentials at the Australian Open, where she enjoys huge popularity among the home fans.
"It's really disappointing. It's probably the worst thing could happen," she said, admitting she felt "lost" on centre court as world number 142 Hradecka recovered from a woeful start to outclass a player 137 places above her.
"I still don't believe that it's true. Probably in a couple of hours I'll know that I am in the second round in the Australian Open and I beat Ana... I'm still smiling," she told reporters.
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