Karlovic, the tournament's defending champion, stretched his Nottingham winning streak to seven matches with a tough 7-6 (7-3), 7-6 (16-14) win over Sam Querrey. Karlovic's powerful serve was working well, as he had 27 aces in the match.
Third-seeded Fernando Verdasco breezed past Bobby Reynolds, 6-2, 6-3, in his second-round match but lower seeded players had to scramble to make Thursday's quarterfinals.
No. 5-seeded Gilles Simons got by Samuel Groth, 6-7 (1-7), 6-4, 6-4, eighth-seeded Gael Monfils beat Julien Benneteau, 3-6, 6-4, 6-2, and No. 7-seeded Andreas Seppi saved a match point before escaping Eduardo Schwank with a 6-1, 4-6, 7-6 (9-7) win. Another second-round match saw Marin Cilic beat Alex Bogdanovic, 6-4, 6-4.
Top-seeded Radek Stepanek withdrew because of a rib injury, giving Vincent Spadea a walkover into the quarterfinals.
Verdasco is to play Simon while Karlovic goes against Seppi, Monfils meets Spadea and Thomas Johansson faces Cilic in the quarterfinals Thursday.
Johansson was given a walkover into the quarters after sixth-seeded Dmitry Tursunov walked off the court during a doubles match and was disqualified from the singles draw also.