Wimbledon champion Muguruza was ahead 2-1 in the deciding set against Serbia’s Aleksandra Krunić in the second round of the warm-up tournament for the season’s first Grand Slam event when she collapsed to the ground following a serve.
The Spanish top seed was unable to continue and handed the match to Krunić 5-7, 7-6 (7-3), 1-2.
Muguruza had won a tight first set and appeared heading for a straight-sets win over Krunić when she opened up a 5-2 lead in the second.
However, she began to struggle in the 30°C (86°F) heat and oppressive humidity as Krunić fought back to win the second set in a tiebreak.
Muguruza received treatment from the physio on court before the start of the decider and broke Krunić only to collapse while serving to consolidate the service break.
The loss ends any hope Muguruza had of leapfrogging Simona Halep and becoming world number one before the seedings are decided for Australian Open which begins on January 15.
Krunić will now play either Sorana Cîrstea or Anastasija Sevastova in the quarter-finals.