Williams appeared to hurt her lower back while attempting to pull up short of the net during the eighth game of the second set. She called for a trainer after the ninth game with the score 5-4 and on serve.
Stephens won the second set when Williams, serving slower than usual, was broken. Williams also had her service broken in the final game of the match.
At 2-1 and on the way to a changeover in the third set, Williams smashed her racket angrily on the court then threw it toward her chair.
Stephens will play defending champion Victoria Azarenka in the semifinals.
Azarenka overcame some early jitters to beat Svetlana Kuznetsova 7-5, 6-1 today.
After dropping serve in a long fourth game which went to deuce 10 times, Azarenka recovered to dominate the rest of the match against Kuznetsova, a two-time major winner who was floating dangerously in the draw with a No. 75 ranking as she recovers from a knee injury.
Azarenka’s American rapper friend, Redfoo, returned from a concert in Malaysia to attend the quarterfinal match.
Wearing a red sleeveless T-shirt that read “Keep Calm and Bring Out the Bottles,” the name of his next single, Redfoo stood, clapped and yelled “Come on, Vika!” during the tight first set.
Asked whether it helped to have her No. 1 fan wearing a keep calm logo, Azareka said “I was looking more at the part that says ‘Bring out the bottles.’ ”
Of her game, she added, “I’m just glad I could produce my good tennis when it was needed.”
Novak Djokovic reached the semifinals after his 6-1, 4-6, 6-1, 6-4 win over fifth-seeded Tomas Berdych on Tuesday night.
The 2-hour, 31-minute victory took exactly half the time of his five-set, fourth-round win two nights previously against Stanislas Wawrinka.
In the semifinals, Djokovic will meet No. 4-seeded David Ferrer.
Ferrer survived a quarterfinal battle with fellow Spaniard Nicolas Almagro, winning 4-6, 4-6, 7-5, 7-6 (4), 6-2.
Maria Sharapova had a 6-2, 6-2 quarterfinal victory over Ekatrina Makarova earlier Tuesday. Sharapova has conceded only nine games in five matches – a record in Australia.
“To be honest, those are not the stats you want to be known for,” Sharapova said.
She’ll play Li Na, who reached the semifinals for the third time in four years at Melbourne Park after beating Agnieszka Radwanska 7-5, 6-3.