Li started off strongly by breaking her opponent's serve at the first time of asking, but Zahlavova-Strycova broke back instantly to show her intent.
Both players earned another break apiece, but a tie-break was needed to decide the opening set, which Zahlavova-Strycova managed to edge 7-5.
Li needed to draw on her experience in the second set as she attempted to bounce back from the deficit, but she struggled to find the breakthrough.
The second seed came close to clinching a break, but Zahlavova-Strycova saved two break points, and another tie-break was eventually needed to decide the set.
Zahlovova-Strycova lost the opening point in the decider, but she fought back to grab two breaks to cause an upset at the All England Club.