Osaka, who won the tournament last year -- defeating Williams for the championship -- knocked out the rising teenage star.
Osaka defeated Gauff in straight sets, 6-3, 6-0.
The teenage Gauff took the tennis world by storm this summer when she became the youngest player to ever qualify for Wimbledon. In making her first Grand Slam appearance there, Gauff took down her idol, Venus Williams.
From there, she became a media sensation, with a Wimbledon match scheduled at its famed Centre Court, going on to beat Magdaléna Rybáriková and Polona Hercog. Gauff's sensational Wimebledon run came to an end when Simona Halep -- who went on to win the tournament over Serena Williams in the final -- beat her in straight sets.
The U.S. Open then granted her a wild card position in the tournament. She went on to beat 18-year-old Anastasia Potapova of Russia in the first round and Tímea Babos of Hungary in the second round, both in three sets.
Osaka, meanwhile, is the No. 1 ranked women's tennis player. While the 21-year-old is coming off of disappointing appearances at Wimbledon and the French Open, she started 2019 by winning the Australian Open.
That victory, in turn, came off a heart-wrenching win at the 2018 U.S. Open over Serena Williams that left both women in tears on the podium as the crowd alternately booed and cheered after a passionate argument between Williams and the umpire.
Now returning to the Billie Jean King National Tennis Center in Queens, New York, Osaka, who was born in Japan and plays as a Japanese athlete, but largely grew up in Long Island, New York, and south Florida, has a new coach and a new stated purpose.
"I probably haven't had fun playing tennis since Australia and I'm finally coming to terms with that while relearning that fun feeling," she wrote on Instagram last month. "I've learned a lot about myself and I feel like I grew up so much as a person in this past year(s) so I'm really excited [to see] what the future looks like on and off the court."
Before they finally met Saturday night, both praised each other and were excited about the first match of what could become a rivalry.
"We're both pretty young, but I'm a little bit newer to the game. So I'm just curious to see how my game matches up against her," Gauff said about Osaka during her post-match interview Thursday, ESPN reported.
"When I hear people talking about someone, I want the opportunity to play them just to assess it for myself," Osaka said of Gauff Thursday, before the younger player won for her third-round spot.