Djokovic, 31, said he had already put the defeat behind him and has turned his attention to next week's Miami Open.
Philipp Kohlschreiber in action at Indian Wells on 12 March 2019.
It's a tough day for top seeds at the BNP Paribas Open in Indian Wells, with both Novak Djokovic and Naomi Osaka crashing out of the tournament on Tuesday. Djokovic said. "But it just happens, one of those days".
"I had to get over it [defeat to Kohlschreiber] in an hour", he added. "Completely different conditions today: Ball bounces much higher".
"Obviously he uses his spin very well".
"I mean, she's the number one player in the world". I don't play often. "He deserved to win".
Kohlschreiber's win over Djokovic was his first over the Serbian in 10 years and the result prompted people to question whether Djokovic was fully healthy. The fit of pique did nothing to improve his fortunes as Kohlschreiber opened the second set with a break.
But shortly thereafter, the Serbian returned to the court alongside Fabio Fognini, defeating 2015 Nitto ATP Finals champions Jean-Julien Rojer and Horia Tecau 7-6 (6), 2-6, 10-6.
Djokovic led that game 30-15, but capped a long rally with a forehand long then double faulted before pushing a forehand wide on break point.
He made no mistake on his second chance, however, firing a sideline-skimming forehand to seal the milestone win on his first match point.
Kohlschreiber will face France's Gael Monfils for a place in the quarter-finals.
Djokovic will try to regroup after the abrupt end to his bid to win a record sixth Indian Wells title and match Rafael Nadal's record of 33 Masters 1000 titles. "I must admit I was thinking about it, but it's part of our world, and we just have to bounce back very quickly". "I mixed up the pace a lot".
The unseeded German knocked off the five-time tournament champion 6-4, 6-4.
Fourth-seeded Roger Federer eased through with a 6-3, 6-4 victory over friend and fellow Swiss Stan Wawrinka.
"I suffered in the past against Diego", he said.
"I'm very confident with my game right now".
"You can't always make it work".
"I lose to Kholi and get absolutely shredded "same old Kyrgios", how about the guy is just good?"
In another upset during the day session Russian 14th seed Daniil Medvedev fell 6-3 6-2 to Serbia's world number 113 Filip Krajinovic.
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