Defending champion Graeme McDowell suffered just his third ever defeat in the Volvo World Match Play Championship, as Ryder Cup team-mate Stephen Gallacher's singles losing streak reached double figures.
McDowell reached the quarter-finals of this event on his debut in 2011, the final in 2012 and won the title last year, while his victory over Alexander Levy in the opening group match on Wednesday made for an overall record of 15 wins from 17 matches.
However, the former US Open champion found Mikko Ilonen in brilliant form at The London Club, the Finn carding seven birdies to hold off a determined McDowell fight back and secure a 2&1 win.
Ilonen was six under par and four up after 10 holes, only for McDowell to birdie the 11th, 13th and 15th.
Both players then found a greenside bunker at the short 17th but after McDowell missed his birdie attempt from long range, Ilonen holed out for birdie to seal the win.
Elsewhere, Shane Lowry was beaten 3&2 by Victor Dubuisson.
"I'm disappointed to lose today but Mikko was incredibly solid," McDowell said. "I felt like I played the best golf the first five holes but he putted better and that was the difference."
With Joost Luiten claiming his second win of the week against Alexander Levy, all four members of the Larson Group can still qualify for the quarter-finals. Luiten and McDowell play each other today, with Levy taking on Ilonen.
Gallacher managed six birdies of his own against Pablo Larrazabal, but saw the Spaniard hole a pitch from 30 yards on the 18th to snatch an unlikely victory.
That made it 10 consecutive singles defeats across six different match play competitions for the Scot, who lost to Phil Mickelson on his Ryder Cup debut at Gleneagles last month.
"I was five under today and have played two guys that haven't had any bogeys," said Gallacher, who lost to Ireland's Shane Lowry in his opening group match and cannot qualify for tomorrow's quarter-finals even if he beats Ryder Cup team-mate Victor Dubuisson today.
"It's not a jinx. What happened at the last is typical match play golf.
"In fairness to Pablo, he holed two good par putts at the ninth and 10th to stay one down before he birdied four of the last six holes. I'm gutted to have lost the match like that, but that's match play golf for you. I'm also feeling a bit tired at the moment, to be honest."
Larrazabal's win was his first singles success at the sixth attempt but the best golf of the day came from Sweden's Henrik Stenson, who recovered from three down after four and was eight under par for his last nine holes in beating Francesco Molinari 2&1, ensuring Molinari cannot reach the last eight.
Stenson tops the Palmer group with three points ahead of George Coetzee and Thongchai Jaidee on two, Coetzee having beaten 2013 runner-up Jaidee 2&1. Stenson takes on Jaidee on Friday with Coetzee up against Molinari.
All four players in the McCormack Group have two points after Jamie Donaldson beat Jonas Blixt 3&2 and Patrick Reed defeated Paul Casey 2&1.