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It took only 65 minutes for American Collins to defeat the defending champion and world number one in a 6-3 6-4 triumph.
Barty, who had a bye in the first round, did have opportunities, breaking in the first game of the match and building a 4-1 lead in the second set.
But on both occasions Collins stormed back, claiming her first win in four attempts against home favourite Barty, who had beaten her in the semi-finals of last year's tournament.
Coco Gauff continued her fine run to reach a first WTA quarter-final since August 2020 with an impressive comeback win over sixth seed Petra Martic.
The American triumphed 5-7 6-3 6-4 in two hours and 12 minutes to book a clash with compatriot Shelby Rogers at the WTA 500 event.
Gauff did not relinquish serve once after losing the first set and did not even offer up a break-point chance in the decider, which she sealed with a pivotal early break secured with a passing winner.
"I go into every tournament thinking that I can win," said the 16-year-old.
"Obviously that's impossible, to have a perfect record, but I go into every tournament believing that I can win.
"I try not to think far ahead in the match, at least I just try to focus on my next match, just because you have to get through that before you can get to the finals, and just take it one match at a time."
Second seed Belinda Bencic will face Storm Sanders in the quarter-finals after a 6-1 6-3 win over Misaki Doi.
In a match where she was not quite as dominant as the scoreline suggests, Bencic had to fend off 12 break points but was successful in saving 10 of them.
Number four seed Elise Mertens withdrew before her match with a shoulder injury, so Anastasija Sevastova beat lucky loser Christina McHale to set up a last-eight tie with Jil Teichmann.