The world No.11 served up 11 double faults as she was beaten 7-5 2-6 6-3 on the English south coast, her high ball toss vulnerable to the swirling gusts that made both players look foolish at times.
But there is a better outlook for Wimbledon for Maya Joint who gained her first win of the grasscourt season by beating three-time grand slam finalist Ons Jabeur, 7-5 6-2.
If not quite a boilover - both players are now ranked in the 50s - Jabeur has far more experience than the Queensland-based teenager, having reached the Wimbledon final in 2022 and 2023.
Kasatkina's defeat means she is played three, lost three on grass since reaching the last 16 on the red clay of Roland Garros. With Wimbledon, where she has never reached the second week, beginning on Monday it is hardly ideal preparation.
"The conditions are very tricky, the ball is swirling around so anything can really happen, you have to keep fighting," said Sun.
Devonshire Park is barely an over-hit forehand from the beach and the flags cracked with the stiff breeze as seagulls fought with the currents overhead.
The conditions made for a topsy-turvy match with New Zealander Sun racing into a 4-0 lead only for Kasatkina, the No.1 seed, to roar back with five straight games. But at 5-4 40-30 she failed to press home a set point and Sun won the next three games to take the set in just under an hour.
This despite a moment of brilliance when she returned a lob on the turn with a superb forehand pass.
Kasatkina, who will be representing Australia for the first time in a grand slam at Wimbledon, having switched allegiance in March, responded impressively, snagging the second set in 36 minutes.
She then broke in the fifth to take a 3-2 lead but Sun, who only served two double-faults himself, took the next three games and the match to move into the last 16 of the WTA 250.
Kasatkina has now lost to players ranked 50 (Sonay Kartal at Nottingham), 49 (Xinyu Wang at Queen's) and 46 (Sun). While Sun is a useful grasscourt player who reached the quarter-finals at Wimbledon last year she had lost five of her last six matches and not beaten a player in the top 250 since April.
Following Kasatkina on court was Australian No.2 Joint, who took a 2-0 lead against Jabeur, but then found herself 2-3 down. However, winning her maiden title in Morocco recently has boosted her belief and she soon broke back to be 4-4 before taking the set 7-5. Once she broke midway through the second the result was never in doubt.
"Wild," she said in response to the victory. "I was really happy to win my first title in Rabat, that was on clay so a bit different to grass, but I am learning to love this surface. [The Rabat title] gives me confidence coming in here," she added. "I take a lot from my previous successes."
Aussie No.3 Kim Birrell plays American Sofia Kenin first up on Tuesday.
In Germany, at the WTA 500 event in Bad Homburg, Alja Tomljanovic lost 6-3 6-2 to Linda Noskova of the Czech Republic.
Four-time grand slam winner Naomi Osaka fired 16 aces past Serbian qualifier Olga Danilovic to earn a 7-6 (8-6) 7-6 (7-4) victory, her first win on grass this season.
Osaka, who had reached the third round of the Australian Open in January before retiring injured, has not had back-to-back wins on any surface since the Italian Open in May. She is currently ranked 56th in the world.
There were also wins for Ekaterina Alexandrova, Donna Vekic, Victoria Azarenka, Katerina Siniakova and Clara Tauson.
