The quadruple-winning 2016 gymnast completed a 1.5 twisting Yurchenko vault rather than the more difficult 2.5 she was down to perform and landed in a deep squat before leaving the arena with her trainer.
Biles returned to her team but was soon confirmed to be pulling out of the competition, with USA Gymnastics revealing that a "medical issue" prevented her from taking any further part.
It was Biles's replacement - Jordan Chiles - whose fall on floor during a forwards tumble saw the USA fall further behind in the battle with ROC, who took gold for the first time as an independent nation with a total score of 169.528, following in the footsteps of the men's team.
The USA would finish over three marks behind with a total of 166.096, and Great Britain would sneak in a first bronze medal since 1928 with a magnificent team performance, posting a score of 164.096.
Stellar bar work from the British contingent in the final rotation saw them pip Italy - who seemed destined to claim a medal - to a podium finish, with Alice Kinsella, Amelie Morgan, Jessica Gadirova and Jennifer Gadirova producing the goods for GB.
Japan and France could only be separated by 0.016 in fifth and sixth respectively, while 2008 champions China could only muster a seventh-placed finish as Belgium's 159.695 saw them finish eighth in an action-packed competition.
The gymnastics continues on Wednesday with the men's all-around individual final, while the women will take to the arena in the same competition on Thursday.