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Ruud, who was beaten by Carlos Alcaraz in the US Open final last year, was the top seed in New Zealand but came unstuck in the round of 16 on Wednesday.
Djere came from behind to defeat the Norwegian world number three 3-6 6-3 7-6 (7-3) and seal his place in the quarter-finals, where he will meet Constant Lestienne.
In the process, Djere recorded his first career victory over a top-five opponent.
Ruud must now shrug off the disappointment and switch his focus to Melbourne, where he will be hoping to break his grand slam duck.
David Goffin overcame qualifier Christopher Eubanks in straight sets to tee up a last-eight tie with Richard Gasquet, while Jenson Brooksby received a walkover due to Diego Schwartzman's injury.
Unlike Ruud, second seed Cameron Norrie did make it through. The world number 12, who spent the majority of his childhood in New Zealand, enjoyed a homecoming as he saw off Jiri Lehecka 6-4 6-7 (4-7) 6-3.
Norrie is unbeaten in 2023, having beat Alex De Minaur, Taylor Fritz and Rafael Nadal while in action for Great Britain at the United Cup.
"Obviously, there were [some] nerves in me, coming back to New Zealand I wanted to play well in front of everyone, and Jiri's a great player," said the 27-year-old.
"So, it wasn't easy, and credit to him in that second set for playing a really good tie-break. He really took it to me, but I really enjoyed the time on the court."
There was also a shock at the Adelaide International 2, where top seed Andrey Rublev succumbed to wildcard Thanasi Kokkinakis.
Rublev hit back after losing the first set but Kokkinakis ultimately prevailed 6-4 3-6 6-3.
Second seed Pablo Carreno Busta also fell out, losing to Kwon Soon-woo, leaving third seed Karen Khachanov as the favourite after his straight sets defeat of Marc-Andrea Huesler.
Mikael Ymer, Jack Draper, Miomir Kecmanovic, Alejandro Davidovich Fokina and Roberto Bautista Agut all progressed.