Local favourite Thompson saved three match points before prevailing 5-7, 7-6 (6), 6-3 against Nadal, who was playing his first tournament after nearly a year out with a hip injury.
Unseeded Elise Mertens has extended a breakout year to storm into the semi-finals of her Australian Open debut by keeping a cool head and honing her technical skills.
Of the top 15 on Forbes' list of best-paid female athletes, 12 were tennis players. Indian badminton player PV Sindhu came in tied for 13th ($5.5 million), with Thai golfer Ariya Jutanugarn ($5.3 million) rounding out the top 15.
Indian tennis stars enjoyed a successful start in the US Open as veteran Leander Paes entered the mixed doubles second round while Rohan Bopanna also won his opening tie in the men's doubles event in New York.
Images from the women's singles quarter-finals at Wimbledon on Tuesday.
Flavia Pennetta, Italy's newly-crowned US Open women's singles champion, will represent Mumbai Masters in this year's Champions Tennis League along with 1996 Wimbledon men's champion Richard Krajicek of the Netherlands following the players' draft, in Mumbai, on Wednesday. The second edition of the Champions Tennis League, the brainchild of former India Davis Cup captain Vijay Amritraj, will be played from November 23 to December 6, an increase of four days from last year's ten-day duration, announced Amritraj at a media conference after the players' draft.
Osaka has had to mix things up during a grinding progression to the last eight at Melbourne Park
Unseeded Australian Daria Gavrilova upset fifth seed Petra Kvitova, of the Czech Republic, 6-2, 6-1 in the first round of the China Open on Saturday as Serbia's Aleksandra Krunic showed stunning powers of recovery to pull off her own shock win over sixth seed Elina Svitolina.
Caroline Wozniacki overcame a mid-match wobble and withstood a barrage of big hitting to get her WTA Finals title defence back on track with a 7-5, 3-6, 6-2 victory over Petra Kvitova at the Singapore Indoor Stadium.
The 12-time French Open champion unhappy with schedule.
Sloane Stephens was keen to swat away any references to a controversial clash against Victoria Azarenka at last year's Australian Open as the American advanced to a possible fourth-round clash against the two-times champion on Monday.
Marin Cilic and Milos Raonic booked their spots in the Paris Masters second round on Monday, while Roger Federer pulled out of the tournament with next month's ATP Finals on the horizon.
Britain's Johanna Konta faces an anxious 24-hour wait before discovering whether she will make her debut at the WTA Finals in Singapore.
Maria Sharapova's US Open preparations took a major blow with the Russian World No 2 forced to withdraw from next week's WTA event in Toronto.
Murray knocked out by Fritz in Washington
Spaniard Garbine Muguruza withdraw from the Italian Open semi-finals with a neck injury on Saturday, eight days before she is due to start the defence of her French Open title at Roland Garros.
Three women in the field have topped the world rankings this season, incumbent Simona Halep and her predecessors Garbine Muguruza and Karolina Pliskova, but none of them have been able to kick on and cement their place as the tour's dominant player.
Naomi Osaka beat Jennifer Brady to win her second Australian Open title and fourth Grand Slam crown, extending her win streak to 21 matches.
Novak Djokovic produced a superhuman effort to subdue Argentine Francisco Cerundolo.
Simona Halep trailed by a set and 5-1 against Elina Svitolina but somehow dug herself out of a hole before storming to victory to set up a semi-final against Karolina Pliskova.
Images from Day 10 of the 2020 French Open, at Roland Garros, in Paris.
Czech Karolina Pliskova stopped upset-maker Varvara Lepchenko in the semi-finals at the Bank of The West Classic in Stanford, California, on Saturday.
Ons Jabeur stands on the verge of history with a maiden Grand Slam title at Wimbledon within her grasp but in Czech surprise package Marketa Vondrousova she faces a final opponent who could tear up the script and prolong her wait.
Caroline Woznaicki produced an almost perfect display to dismantle world number one Simona Halep 6-0 6-2 at the WTA Finals on Wednesday, the Dane recording her second dominant victory in as many matches.
Naomi Osaka has sacked her second coach in seven months, splitting with Jermaine Jenkins
The sixth seed, a winner in Madrid last weekend for the second year in a row, will meet either Spain's French Open champion Garbine Muguruza or Ukraine's Elina Svitolina in Sunday's final.
Nick Kyrgios continued his impressive run of form ahead of this month's Australian Open by powering the host nation to the mixed-team Hopman Cup title against Ukraine in Perth on Saturday.
Stefanos Tsitsipas enjoyed an incident-free path into the third round of the French Open with a win over Roberto Carballes Baena.
Novak Djokovic will begin his Australian Open title defence against Frenchman Jeremy Chardy, while reigning women's champion Sofia Kenin meets wild card Maddison Inglis, following the draw for the year's first Grand Slam on Friday.
This year's Australian Open will be allowed to admit up to 30,000 fans a day, around 50% of usual capacity, amid the COVID-19 pandemic.
Relief was at hand, however, with a cool change blowing over the city and the temperature expected to fall back below 30 by the evening.
Penpix of the top women's contenders at the 2017 French Open:
Former number one Martina Hingis is not impressed by the current crop of young players whose main focus is on hitting harder, rather than developing an all-round game, the Swiss veteran said.
The stars were out in full force at the Kensington Roof Gardens, in London, on Thursday night.
Unseeded Marketa Vondrousova of the Czech Republic stunned Tunisia's Ons Jabeur 6-4 6-4 to win the Wimbledon women's singles final on Saturday.
Jelena Ostapenko became only the sixth female Grand Slam champion to lose in the opening round of their title defence on Sunday when she lost to Kateryna Kozlova at the French Open.
Sofia Kenin, defending champion Belinda Bencic and third seed Elina Svitolina made swift exits at the Dubai Duty Free Tennis Championships
Factbox on Japan's Naomi Osaka, who beat Victoria Azarenka of Belarus 1-6, 6-3, 6-3 to win the US Open title on Saturday.
Aryna Sabalenka expressed more concern over the vaccine than her quarterfinal opponent No 1 Ash Barty
American Stephens stayed calm and saw off an increasingly agitated Angelique Kerber in the winner-takes-all night match to complete round-robin play with a spotless 3-0 record after she wrapped up a 6-3, 6-3 victory against the German.
