Wozniacki, who needed a medical timeout in the final set to have her left wrist taped, lost 3-6, 7-5, 6-2 to seventh-seeded Agnieszka Radwanska of Poland.
In the previous match at the Olympic Tennis Centre, Wimbledon champion and No. 2 Kvitova continued her pursuit of the top ranking by beating Daniela Hantuchova 6-0, 6-4 to move into the semifinals against French Open winner Li Na.
Li defeated Lucie Safarova of the Czech Republic 6-2, 7-6 (3).
Wozniacki's win in the opening set came among five service breaks between the players, and she served for the match at 5-4 in the second before Radwanska began her comeback.
The Danish player seemed to be increasingly bothered by what television commentators said was a sore tendon in her left wrist, and she had it heavily taped after the third game of the final set.
"I hope it's not serious," Wozniacki said of her injury. "I could feel it today, especially in the third set, but I'm going to go get it checked out tomorrow and hopefully it's OK. I should be completely fine for the Australian Open."
Wozniacki, who reached the semifinals of the Australian Open and U.S. Open last year, said the top ranking is not a concern for her.
"To be honest, I don't think about it," Wozniacki said. "The most important thing is to be healthy and be able to play and play well. I mean, what happens happens, it doesn't matter."
Kvitova, who helped the Czech Republic win the Hopman Cup last weekend, needed a little more than an hour to beat Hantuchova, the losing finalist last week at the Brisbane International. Kvitova can get to No. 1 by winning the Sydney tournament.
"I'm still on track," Kvitova said of the top ranking. "But still, it's two matches away and the next one is really tough. It's still a long way away, so we will see."
Del Potro defeated Lukasz Kubot 6-4, 6-2 in the second round. Reynolds beat Isner 3-6, 6-4, 6-3.
Third-seeded Richard Gasquet of France beat Fabio Fognini of Italy 6-2, 6-1; former Australian Open finalist Marcos Baghdatis defeated Matthew Ebden of Australia 3-6, 7-5, 7-6 (3); and Denis Istomin of Uzbekistsan had a 6-2, 6-1 win over American Ryan Sweeting.