Rather than saving her agression and power for her opponent, Williams instead served up a volley of abuse to a lines woman who had incorrectly called her for a foot fault.
She was assessed a code violation which came when she was facing match point and promptly lost.
Comeback queen Kim Clijsters then went on to win the event.
Clijsters who had retired to have a baby, was playing in her first Grand Slam event in over two years.
Hollywood script writers must dream of being able to think up stories like it.
With the 2010 Grand Slam season about to start in Melbourne on Monday, Clijsters will be joined on the circuit by fellow un-retiree and Belgian, Justine Henin.
Added to the field also is the ever popular Maria Sharapova who missed last years Open after winning it all in 2008.
The women's draw will be full of worthy candidates.
But still, Serena Williams remains the clear favourite. She is by far the most dominant woman on the tour when she decides to play at her best. She doesn't always perform to her optimum level at non-Grand Slams, but when she is on her game, no other player can match her.
She is too strong and can simply overpower her opponents. There's been instances in the past when she has been beaten, such as the Wimbledon final in 2004 when Sharapova out-thumped her, but that was the exception, not the rule.
It was disappointing to see the way that Serena exploded at the lines woman during the US Open last year and I think that she'll use that incident and resulting embarrassment as motivation to show that she is the best.
She constantly mocked Russian Dinara Safina last year who unconvincingly held the No. 1 ranking for most of last year, for being unable to win a major.
Serena over took Safina at the end of last year and Williams has what she believes is hers - top spot on the official rankings. However, as defending champion, Serena will need to win in Melbourne to guarantee that she stays there.
At 28, Williams could play this game for a lot of years, but she is already wealthy and has many interests outside of tennis so it's reasonable to think that she's beginning to think more and more about the next stage of her career.