The 22nd seeded Russian came back from 3-0 down in the deciding set as seven-times grand slam champion Williams struggled to hold serve at Margaret Court Arena.
The 33-year-old Williams had conceded a decisive break in the second set with three successive double-faults and was powerless to prevent Makarova from sealing the match in a hurry.
Makarova brought up three match points with a big volley and closed it out when Williams blasted long on the second of them.
The Russian next faces American Irina Falconi.