After barely qualifying for the evening final in a performance that hinted at trouble ahead, Phelps struggled to a fourth-place finish and was denied his 17th career medal. When it was done, he could barely pull himself out of the pool.
Brazil's Thiago Pereira took the silver, and Japan's Kosuke Hagino claimed the bronze - beating Phelps by a barely comfortable 34-hundredths of a second for a spot on the podium.
"It was just a crappy race," Phelps said. "I felt fine the first 200, then I don't know. They just swam a better race than me, a smarter race than me, and were better prepared than me. That's why they're on the medal stand."
It was the first time since the 2000 Sydney Games, when Phelps was a 15-year-old unknown who qualified in just one event, that he didn't win at least a bronze in an Olympic race. Since then, he was 16-of-16 - 14 golds and two bronzes.
This was a shocker and totally out of character for a swimmer who won six gold medals in Athens, then a record eight in Beijing to break Mark Spitz's Olympic record.
In the 400-meter freestyle event, Sun Yang of china won the gold, followwed by Olympic champion Park Tae-hwan of South Korea, who got silver. Park was disqualified earlier for a false start by a judge on the pool deck but was reinstated after video was reviewed.
Another stunner Saturday was the British gymnastics team, who upset Olympic champion China and took the early lead in qualifying. A spectacular pommel horse by Louis Smith capped the day for the British, who finished almost 2.5 points ahead of China with at a total of 272.420.
China scored 269.985, followed by France (265.759) and South Korea (255.327). Japan, the silver medalist in Beijing, and the United States go later Saturday, as do Germany and Russia.
Team finals are Monday, and everyone gets a do-over. Still, this was a stunning result for the Chinese, who have won the last five world titles and were so dominant four years ago in Beijing that they left with all but one of the men's gold medals.
The Associated Press contributed to this report.