Croatian Martic hit back to win their third-round clash 6-7(3) 6-4 7-5.
Emma Raducanu missed out on a place in the last 16 at the BNP Paribas Open after losing in the final set to Croatia’s Petra Martic on Sunday.
The US Open champion served for the match in the decider but could not finish the job and bowed out of the Indian Wells tournament as Martic hit back to win 6-7(3) 6-4 7-5.
Britain’s Raducanu, the 11th seed, led 5-4 with a break but Martic reeled off three successive games to prevail in two hours and 46 minutes.
The match had been an eventful one. World number 79 Martic seized the early initiative with a break in the first set but Raducanu quickly turned things around to lead 5-3.
She then had the chance to serve for the opener but it took a tie-break for the 19-year-old to eventually nudge ahead after Martic again responded.
The pair then traded breaks in the second set but Martic went on to draw level after saving a crucial break point en route to holding serve for 5-4.
Martic broke early in the third but Raducanu then won five of the next seven games to move within sight of victory.
Yet there was to be one final twist and Martic, a quarter-finalist four years ago, broke back before going on to take the win.
The Croatian will now face 28th seed Liudmila Samsonova, who beat Danka Kovinic 6-4 7-6.