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World number three Ivanovic struggled throughout with her fellow 20-year-old's deep and powerful hitting.
The Serbian never looked comfortable on the clay surface against her 64th ranked opponent, whom she had struggled to beat in three sets in their only previous meeting, five years ago on the clay in Bucharest.
"I had only one victory over a top 10 player which was Venus Williams two years ago," said the victor.
"This is my second victory against a top 10, actually she's number three in the world so it's one of the best games I ever played.
"I felt today that she wasn't very sure with her game. I wanted to put the ball deep in the court and I did a good job with that."
Ivanovic was particularly out of sorts in the first set and found herself serving at 2-5, 0-40 at one point.
She rallied to save five set points over the next two games but eventually succumbed 6-4 as she made a poor approach shot and was easily passed with a backhand down the line as she was stranded in no man's land.
The Serb went a break up in the second but was broken back and at 3-3 she failed to take any of five more break points.
She finally broke again for 6-5 on a wild error from the Bulgarian and two more errors from Pironkova gave Ivanovic the set in the next game.
But the third set was one-way traffic and Pironkova claimed the biggest win of her career on her second match point.
Her previous best victory was against the then world number 10 Venus at the 2006 Australian Open. Ivanovic admitted she had simply been off her game.
"I definitely made a lot of unforced errors off both sides. It felt tough, it was quite hard out there," she said.
"I struggled to find my rhythm or find something inside to fight. I struggled to find my intensity today.
"I felt coming into this tournament that I was in good shape, I was working hard and doing well so I'm very disappointed. I really didn't play that well today."
Number two seed Maria Sharapova was forced to struggle against Slovakia's Dominika Cibulkova before finally sealing a 6-2, 3-6, 6-4 victory that took 2hrs 50mins to complete.
The first set may not have been close in terms of the number of games Cibulkova won but the Russian needed seven attempts to close out the set on her own serve.
She was outplayed in the second set and then had to dig deep to pull the third set out of the bag, although every game was a struggle with numerous deuces.
"I knew I had a really tough opponent and I guess I can say I'm lucky to get through it," admitted Sharapova.
Wimbledon champion Williams had no such difficulties in her second round clash against Australian Samantha Stosur despite seemingly hurting her side.
The seventh seeded American won 6-4, 6-1 and will play Russian Vera Zvonareva, who struggled through 7-5, 4-6, 7-5 against Iveta Benesova, in the third round.
Williams was never seriously in trouble and took total control in the second set, sealing it with an ace.
Her sister Serena, the fifth seed, had an even easier time of things and blitzed Ukrainian doubles specialist Alona Bondarenko 6-2, 6-0.
With Justine Henin having retired and top seed Ivanovic out, the draw is set up for a possible all-Williams final, but Serena didn't want to think about anyone else.
"Ivanovic was beaten today but she's not my concern, my only concern is me," said the American. "I love her, she's a great player but my focus is on me."
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