Sharapova, who needs to win the title and rely on Serena Williams not reaching the final in Singapore to overtake the American for top spot, fell to a 0-2 record while Kvitova is 1-1 in the White Group round-robin stage.
In order for Sharapova to progress to the semifinals, she will need to win her last match against Agnieszka Radwanska and rely on Caroline Wozniacki beating Kvitova, and have both matches decided in straight sets.
Sharapova, who lost the Wimbledon final to Kvitova in 2011, had beaten the Czech left-hander in their past five meetings and started brightly by winning the opening two games. But Kvitova took over from there, winning 11 of the next 12 games.
Kvitova said she was feeling burnt out during her first-round loss to Radwanska, so took an unusual approach to freshen up for Thursday's match.
"When I lost against Aga . I was so tired and sick of the tennis for a moment," Kvitova said. "So I didn't practice today at all and I just really relaxed and cleaned my mind a little bit."
Sharapova's prior winning streak in their head-to-head matches suggested she had figured out how to beat the clean-hitting Czech player, but she had no answers as Kvitova reeled off a series of deep winners to take over the match.
"I didn't feel as sharp as I did in the previous matches against her," Sharapova said. "I just don't feel that I reacted as well in her bigger shots. She's someone that likes to play aggressive and hit the ball, and very deep as well. She countered my shots extremely well and I was just never ready for the next ball."