The world number one and defending champion lost the first five games and never recovered.
"Obviously things didn't go great out there, but she was a great counterpuncher today and hit a lot of balls back," Williams told reporters.
"I really knew nothing about her game going into the match, so she played a really good match against me today. And it just wasn't my day," added Williams.
The 20-year-old Cepelova had never beaten a top 15 player but held her nerve to pull off the biggest win of her career.
Williams, a 17-time Grand Slam champion, won the Sony Open on Saturday and had been on a roll coming to Charleston, South Carolina where she was a three-time champion.
Her sister Venus also had problems in her opening round match, losing seven consecutive games at one point, but recovered to beat Barbora Zahlavova 6-3 0-6 7-5.
Venus, who won the event in 2004, said she had been under the weather recently.
"I've actually been pretty sick lately, so it was a little rough out there today," she said. "I just kept fighting till the end."
In other early-round action, sixth seed Eugenie Bouchard breezed past Alla Kudryavtseva 6-2 6-0, while Australian seventh seed Samantha Stosur overcame a stiff challenge from Yaroslava Shvedova in a 6-3 5-7 6-1 triumph.
Meanwhile, at the Monterry Open, the biggest causality was fourth seed Kirsten Flipkens who lost to Julia Boserup 6-4 1-6 6-2 but second seed Ana Ivanovic and third seed Caroline Wozniacki moves safely on.
Results from the Family Circle Cup Women's Singles matches on Tuesday
9-Lucie Safarova (Czech Republic) beat Virginie Razzano (France) 2-6 6-4 6-4
Jana Cepelova (Slovakia) beat 1-Serena Williams (U.S.) 6-4 6-4
6-Eugenie Bouchard (Canada) beat Alla Kudryavtseva (Russia) 6-2 6-0
Teliana Pereira (Brazil) beat 8-Sorana Cirstea (Romania) 3-6 6-3 7-6(0)
7-Samantha Stosur (Australia) beat Yaroslava Shvedova (Kazakhstan) 6-3 5-7 6-1
Marina Erakovic (New Zealand) beat Nadia Petrova (Russia) 4-6 6-3 6-4
Peng Shuai (China) beat Caroline Garcia (France) 6-2 6-3
14-Andrea Petkovic (Germany) beat Lesia Tsurenko (Ukraine) 6-7(2) 6-4 6-1
Lourdes Dominguez Lino (Spain) beat Anabel Medina Garrigues (Spain) 6-3 6-2
11-Venus Williams (U.S.) beat Barbora Zahlavova Strycova (Czech Republic) 6-3 0-6 7-5
13-Elena Vesnina (Russia) beat Anna Karolina Schmiedlova (Slovakia) 6-2 6-1
Vania King (U.S.) beat Julia Glushko (Israel) 4-6 7-5 6-3
16-Zhang Shuai (China) beat Hsieh Su-Wei (Taiwan) 3-6 7-6(5) 7-6(0)
12-Daniela Hantuchova (Slovakia) beat Shelby Rogers (U.S.) 7-5 7-5
Results from the Monterrey Open Women's Singles Round 1 matches on Tuesday
2-Ana Ivanovic (Serbia) beat Urszula Radwanska (Poland) 4-6 6-3 6-3
3-Caroline Wozniacki (Denmark) beat Coco Vandeweghe (U.S.) 6-3 7-6(4)
Aleksandra Wozniak (Canada) beat Marcela Zacarias (Mexico) 3-6 6-0 6-1
Julia Boserup (U.S.) beat 4-Kirsten Flipkens (Belgium) 6-4 1-6 6-2
8-Monica Puig (Puerto Rico) beat Olga Puchkova (Russia) 6-0 6-3
6-Magdalena Rybarikova (Slovakia) beat Olga Govortsova (Belarus) 6-3 3-6 6-2
Luksika Kumkhum (Thailand) beat Dalila Jakupovic (Slovenia) 7-5 6-0
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- Teliana Pereira