The scores in the shocking upset were 6-4, 1-6, 6-2.
The second-seeded Sharapova beat world No. 1 Justine Henin in last year's final at Flushing Meadow, but lost the last six games of this match. She lost the first set after committing 20 unforced errors.
"I don't feel like I had that belief that I usually do," Sharapova said. "You'd think I'd have the momentum in the third set with a break."
Also losing on the women's side were No. 7 seed Nadia Petrova, who fell, 6-4, 6-4, to rising Hungarian Agnes Szavay, and No. 11 Patty Schnyder, who was beaten by unseeded Tamira Paszek of Austria, 6-4, 4-6, 7-6.
No. 6 Anna Chakvetadze was among Saturday's winners.
2014: The Year in Music [PHOTOS]