Venus closed out the 29th career meeting between the two on her second match point as Serena sailed a forehand long to end the third round match.
The 10th seeded Venus moves on to the round of 16, where she will face either Anastasija Sevastova or 12th seeded Julia Georges.
It was the first meeting between the two sisters since they clashed in the final of the 2017 Australian Open which Serena won before taking a 15-month hiatus due to her pregnancy.
Venus blasted six aces but had eight double faults in the one hour 26 minutes main stadium match. Serena is still shaking off the rust after the long layoff as she hit four aces but had her serve broken four times.
But for some it brought closure to the once testy relationship between Indian Wells and the sisters who hail from the Los Angeles suburb of Compton.
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