Azarenka had appeared in the last two Madrid Open finals, finished second both times.
But Makarova ended that sting with a 1-6, 6-2, 6-3 win over the former No. 1 and two-time Australian Open champion. Makarova allowed Azarenka only one break after the first set while finishing off four of her 12 chances to advance to the third round.
It was the first time this season Azarenka, 18-1 in 2013, lost on the court. However, she dropped out of two tournaments via walkovers.
No. 6-seeded Angelique Kerber and 16th-seeded Ana Ivanovic set up a quarterfinal match by winning three-set decisions. Kerber defeated 2009 French Open champion Svetlana Kuznetsova 3-6, 6-4, 7-5 by fighting off 14 of 17 break chances for Kuznetsova over the last two sets. Ivanovic, who won Roland Garros in 2008, posted a break when Britain's Laura Robson was serving for the match and won five of the last seven points in the contest for a 5-7, 7-2, 7-6 (7-5) victory.
In second-round matches, wild-card Daniela Hantuchova eliminated eighth-seeded Petra Kvitova 2-6, 6-2, 6-4; 13th-seeded Maria Kirilenko stopped Kristina Mladenovic 6-7 (5-7), 6-1, 6-4; and Kaia Kanepi stopped Carla Suarez Navarro 6-3, 6-1. It was the second time in a week they'd played.
Also, Julia Goerges advanced in a walkover against Varvara Lepchenko.