US teen prodigy Coco Gauff has knocked defending champion Naomi Osaka 6-3, 6-4 out of the Australian Open, pulling off another big upset at the year's first Grand Slam.

In the first set during their third-round match on Friday, the 15-year-old broke the Japanese star's serve on 4-3, partly thanks to three unforced errors by Osaka, and served out the opener.

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The Japanese third seed looked deflated as she dropped her serve again at the start of the second set, but got going with a couple of winners in the following game, and capitalised on a crucial double fault on deuce to tie things up to 1-1.

But after another good hold by the American, Osaka threw away another service game on 3-3 with four unforced errors. The 67th-ranked teenager then held her nerve to serve the match out to love.

"Honestly what is my life, oh my gosh," an elated Gauff said in disbelief after the match.

"Two years ago, I lost first round in juniors, and now I'm here. This is crazy."

Gauff defeated former world number one and seven-time Grand Slam champion, Venus Williams, in the first round, before taking out Romania's Sorana Cirstea in a tightly-contested second-round match.

Osaka was the third former Australian Open winner to bow out of the draw on Friday after Serena Williams and Caroline Wozniacki, who won the title in 2017 and 2018, lost their respective matches at Melbourne Park earlier in the day.

The 22-year-old Japanese, who had beaten Gauff easily in straight sets when the two met in the third round of the US Open last year, said: "It was one of those days where I couldn't do anything right."

"It's just tough," Osaka said in her post-match news conference.

"You don't want to lose to a 15-year-old, but that's for me a reality check. It doesn't really matter the age of the opponent. Of course, she deserves to be here ... and I just have to work harder."