Sharapova and Stosur lose
Sharapova's hopes of ending the year as world number one all but went with the defeat. She withdrew from the season-ending WTA Championships with an ankle injury later in the day.
The Russian - who arrived in Istanbul still with a shot at toppling Caroline Wozniacki - fell apart in the first set tiebreaker on her way to a second consecutive White Group defeat at the million year-ending tournament.
Samantha Stosur - who beat Sharapova on Tuesday for the first time in 10 attempts - opened proceedings on Day Two in the Sinan Erdem Arena but came down to earth with a bump as she lost 6-2 6-2 to fired-up Belarussian Victoria Azarenka.
World number two Sharapova, playing at the Championships for the first time since 2007, almost missed the event with an ankle injury and her lack of recent match practice was evident again as she let tournament debutant Li off the hook.
Sharapova led 4-1 in the opening set and after seeing her lead evaporate she then moved 4-0 ahead in the tiebreak only to lose the next seven points with a run of unforced errors.
Li, who beat Sharapova in the French Open semi-finals this year on her way to claiming a first grand slam singles title for an Asian-born player, moved into a 5-2 lead in the second set before an attack of the jitters almost proved costly.
Serving for the match at 5-4 Li slipped 15-40 behind as Sharapova blazed away but she held her nerve to claim victory at the first attempt when her opponent hammered a backhand return over the baseline.
While it is still mathematically possible for Sharapova to finish in the top two in the group her chances are hanging by a thread with a match against ther in-form Azarenka to come.
Azarenka, who did not play on Tuesday, looked far fresher than the US Open champion Stosur, keeping the 27-year-old on the back foot with searing groundstrokes, most of which were accompanied by her trademark whine.
Stosur's heavy topspin and slice had little effect on the bright green and purple indoor court and she slipped to a fifth loss in five against world number four Azarenka in one hour and 18 minutes.
She refused to blame the schedule for her limp display, having been slated to play in the first match on Wednesday despite finishing off Sharapova at close to midnight the previous night.
"Oh, I can't blame that," said the Australian. "It was a quick turnaround, but I felt like I was ready to go.
"It just wasn't fast or crisp enough. I felt like I got pushed around the court."
All is not lost for Stosur, however, as she can still qualify for the semi-finals if she beats Li in her final round-robin match.