The 39-year-old, who has spent 319 weeks at number one over the course of her glittering career, dropped rankings points at Wimbledon, where she was a finalist at the last edition after she withdrew through injury from her first-round match with Aliaksandra Sasnovich.
Her withdrawal sees Williams plummet eight places to 16th in the world, her lowest ranking since early January 2019.
Simona Halep also tumbled to ninth after injury ruled her out of defending the Wimbledon title she won in 2019, and the points that went with that victory.
Ashleigh Barty, who won the title for the first time, increased her lead at the top of the rankings and is now nearly 2 300 points ahead of the Japanese Naomi Osaki who skipped the London tournament.
Karolina Pliskova, the losing finalist, moved from 13th to 7th place.
1. Ashleigh Barty (AUS) 9,635 pts
2. Naomi Osaka (JPN) 7,336
3. Aryna Sabalenka (BLR) 6,965 (+1)
4. Sofia Kenin (USA) 5,640 (+2)
5. Bianca Andreescu (CAN) 5,331 (+2)
6. Elina Svitolina (UKR) 5,125 (-1)
7. Karolína Pliskova (CZE) 4,975 (+6)
8. Iga Swiatek (POL) 4,695 (+1)
9. Simona Halep (ROM) 4,330 (-6)
10. Garbine Muguruza (ESP) 4,165 (+2)
11. Belinda Bencic (SUI) 4,085
12. Petra Kvitova (CZE) 3,985 (-2)
13. Barbora Krejcikova (CZE) 3,893 (+4)
14. Victoria Azarenka (BLR) 3,845
15. Jennifer Brady (USA) 3,830
16. Serena Williams (USA) 3,641 (-8)
17. Elise Mertens (BEL) 3,575 (-1)
18. Anastasia Pavlyuchenkova (RUS) 3,420 (+1)
19. Maria Sakkari (GRE) 3,420 (-1)
20. Elena Rybakina (KAZ) 3,258
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