Ronnie beaten by Anthony Hamilton at Shanghai Masters

The world number 10 led 3-2 but qualifier Hamilton, who beat Stephen Maguire in round one, won three successive frames for a 5-3 victory.

Hamilton will now meet Mark King, who beat Fergal O'Brien, in the last eight.

Elsewhere, the world top three of Mark Williams, Mark Selby and John Higgins all enjoyed comfortable progression through to the quarter-finals.

Williams beat Robert Milkins 5-1, the same score by which Milkins had beaten seven-time world champion Stephen Hendry in round one.

Stuart Bingham had also won well in the previous round, defeating Judd Trump 5-1, but he was hammered 5-2 by Higgins.

Selby was the most impressive, whitewashing Jamie Cope 5-0.

"Jamie could have won either of the first two frames, but from 2-0 up I played really well," Selby told worldsnooker.com.

"In my first match here the balls were awkward and it was slow-moving, but today it was more open and much easier.

"I think in the first few weeks of the season a lot of the top players were rusty, myself included. But now we're starting to find some form so it's no surprise that the bigger names are getting through here."

Higgins trailed 1-0 and 2-1 before winning four straight frames to see off Australian Goldfields Open winner Bingham and then commented: "Stuart has been in good form so I was lucky that he wasn't at his best today.

Former world champion Neil Robertson defeat Michael Holt 5-2, while Shaun Murphy just about saw off Mark Allen, winning a thrilling contest 5-4.

But the big shock of the day was the exit of O'Sullivan, who felt that he paid for some poor shots.

"I had chances but missed some silly balls," said O'Sullivan. "It was a 50/50 game but he played well towards the end when it mattered.

"I'll go home and start again. I'm enjoying playing. It would be nice to be back at the top but I don't expect it. I'll just enjoy whatever is left of my career. I've got nothing left to prove and I'm not young any more."