The two-time world champion was upstaged by Singapore's Loh Kean Yew, who recorded his first career win against the Japanese.
Loh started the match strongly and enjoyed an 11-2 lead at the halfway point of the opening game. Momota was not able to find a response to haul himself back into the game as the 24-year-old kept edging ahead to win the opener.
The second game saw the Singaporean get off to another flying start, and lead 9-2 before the world No. 1 finally kicked into gear. A run of eight consecutive points saw Momota inch ahead of his opponent 10-9. From then on, the two traded points before Momota was just able to steal the second game and force a decider.
The third game saw the pre-match favourite lead for most of the way, but Loh fought his was back into the match to level the score at 16-16. There was very little separating the two as they drew level again at 19-19.
In the end, Loh just managed to snatch the win to record his first ever victory over Momota, taking the win 21-7, 17-21, 21-19.
World No. 26 Loh will next play Denmark's Hans-Kristian Solberg Vittinghus for a spot in the semi-finals.
Home favourite Christie cruises through to quarter-finals in Bali
A fine performance by sixth seed Jonatan Christie saw him book his place in the quarter-finals.
Christie was simply too powerful for his compatriot Chico Aura Dwi Wardoyo in Bali, needing only 35 minutes to wrap up the match in straight games, 21-11, 21-12.
In what was the first official encounter between the two Indonesians, Christie raced to an early 11-4 lead in the opening game. Dwi Wardoyo, ranked ranked 60th in the world, was unable to close the gap and needed to win the second game to stay in the contest.
But his opponent maintained was in no mood for mercy. After building an 11-7 lead at the mid-game interval, 2018 Asian Games champion Christie sealed the win without dropping a game.
Christie advances to the quarter-finals of what is the final World Tour event of the season, where he will next play Anders Antonsen from Denmark.
Antonsen fought hard to overcome Wang Tzu Wei from Chinese Taipei and was stretched to three games. The Dane found himself under pressure after going down in opening game, and had to come from behind to secure victory, 18-21, 21-13, 21-14.
The third seed's compatriot Rasmus Gemke had a much easier path to the final 8, after his Indonesian opponent Shesar Hiren Rhustavito retired injured from their match in the second game.
Gemke will next face Nishimoto Kenta, who sealed a shock win over fourth seeded Chou Tien Chen from Chinese Taipei. The Japanese bounced back from a game down to clinch victory, 8-21, 21-15, 21-11.
Reigning Olympic champion Viktor Axelsen made it four Danes in the quarter-finals when he defeated India's Kidambi Srikanth 21-14, 21-18 and will next face another player from India, in the form of Sai Praneeth, for a chance at a semi-finals berth.