The 30-year-old admitted he was far from his best in the three hour, 44 minute contest on Rod Laver Arena, the scene of his first grand slam triumph in 2014, and was surprised only that he managed to force five sets.
"I think honestly I've come from too far. I've been sick for 10 days now," the Swiss told reporters after the 6-4 6-3 5-7 4-6 6-3 loss.
"Still trying to get into the second week. Couldn't really be at my top. When you play a top guy like Milos, it's difficult. You need to be 100 percent to have a chance.
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"Today he pushed from the beginning. He was better."
Fourth seed Wawrinka had reached at least the quarter-finals of the last six grand slams and when he battled back to level after dropping the opening two sets on Monday it looked as though that run would continue.
But there was not enough left in the tank and Raonic broke midway through the deciding set, staying rock solid to post a first win over Wawrinka at the fifth attempt.
"It's been a tough 10 days for me. So it's tough to recover, to rest, and at the same time play a grand slam. That's it," Wawrinka, who has broken the grip of the established "Big Four" in men's tennis, said.
Wawrinka, the only player apart from Novak Djokovic to have won the Australian Open in the last five years, had reached the last 16 without dropping a set and despite falling short against Raonic, he certainly did not consider his tournament a failure.
"Well, it's always a disappointment to lose a match, to lose before quarter, whatever, to lose in five sets," he added.
"Again, in general, when I look at a tournament, I look about everything, not just the last match that I lost. And I think it was still a positive tournament. Find a way to be there, but lost against Milos.
"He's a really good player also. So it can happen."
(Editing by Martyn Herman)
