Alex de Minaur is the last home seed standing after Thompson was sent unceremoniously packing on Wednesday with a straight-sets loss to Portuguese power puncher Nuno Borges.
With no time for sentiment, Borges pummelled a wounded Thompson 6-3 6-2 6-4 in a second-round ambush on John Cain Arena.
Mixing some ferocious hitting from the back with deft drop shots, Borges drove Thompson mad.
Nuno Borges played party pooper in a surprise win over Jordan Thompson. (James Ross/AAP PHOTOS)
Seeded at a grand slam for the first time after a breakout season in 2024, Thompson received a code violation for ball abuse after falling two service breaks behind in the second set.
The world No.27 continued shaking his head, seemingly searching for answers to the Borges onslaught, after slipping two sets to love down.
The 29-year-old's anguish was ultimately the result of feeling mostly helpless after entering the Open under a fitness cloud with a calf strain.
He revealed the full extent after lamely crashing out of the first major of the year.
"That's the most disappointing part. If he'd have beaten me 2, 3, 3, I walk away with a healthy body, I'd be happier," Thompson said.
"It was fine until probably 4-3 - and I was getting outplayed, to be honest, anyway - but then I did something to the other side of my foot so, yeah, not good."
After trying to manage the injury all summer, using a hyperbaric chamber, ice baths, painkillers and physiotherapy, Thompson says he now must simply rest before returning to the tour.
"I don't want to play again, don't want to be on my feet until it's back to 100 per cent," he said.
"It's probably not a good sign that I did something while on those injections as well."
With early protection from seeds, Thompson had been unlucky to draw Borges before the third round with the world No.33 the highest-ranked player he could have run into in his second match.
Thompson should have been ready for the threat, with Borges becoming somewhat of a grand slam spoiler for Australians.
He crashed Thanasi Kokkinakis's party at last year's US Open, two days after Kokkinakis had ousted 2023 Australian Open runner-up Stefanos Tsitsipas in the first round.
Thompson's departure comes after 25th seed Alexei Popyrin bombed out in the first round on Tuesday night with his own injury-hampered four-set loss to Frenchman Corentin Moutet.
Borges' victory earned the 27-year-old a crack at Spanish third seed and reigning French Open and Wimbledon champion Carlos Alcaraz on Friday as he chases a spot in the last 16 at Melbourne Park for a second straight year.
"It is the happy slam for me for sure," he said.
"It wasn't easy dealing with the nerves. I knew I was not going to be the crowd favourite and Jordan was playing amazing.
"I'm really sorry for finishing it this way."
Ajla Tomljanovic suffered a gallant 6-4 7-5 second-round defeat to Russian world No.13 Diana Schnaider, leaving 20-year-old wildcard Talia Gibson and inspired qualifier Destanee Aiava as the last locals left in the women's singles.
James Duckworth also bowed out, going down 6-4 6-2 7-5 to Roberto Carbelles Baena after having to endure a near-four-hour rain delay before the Spaniard returned to the court to serve out one game to secure victory.
Aleksandar Vukic was leading 22nd seed Sebastian Korda 6-4 2-4 before the rain stoppage, while Kokkinakis was taking on British 15th seed Jack Draper in the night session at John Cain Arena.
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