It marked the first opening round exit from a grand slam for Gauff, a crowd favourite at Flushing Meadows pre-COVID-19 when spectators were allowed into the Billie Jean King National Tennis Center.
Wimbledon quarter-finalist Muchova held serve for an early 3-2 lead in her first career meeting with Williams but the six-times champion cranked up the pace and won the next seven games to take over the match.
Kerber had looked increasingly impressive on the Santa Ponsa grasscourts as she warms up for the defence of her Wimbledon title but could not contain a strong Bencic comeback.
Teenager Marketa Vondrousova continued to impress at the French Open when she walloped Latvia’s Anastasija Sevastova 6-2 6-0 to reach her maiden Grand Slam quarter-finals on Sunday.
Petra Kvitova overcame a rocky start to beat Anastasija Sevastova in three sets and progress to the last four of the WTA tournament in Stuttgart on Friday.