While the result was a huge shock, it was clear from the outset that the Swiss 32-year-old, champion in Melbourne in 2014, was hampered in his movement.
Watching him grimace and clutch at his knee it was a surprise he even made it to the end of the match.
World number 97 Sandgren, who had won only one grand slam singles match compared to the three grand slam titles Wawrinka owns, produced a rock-solid display to claim the biggest scalp of his career, offering up only two break points.
The Tennessee native, named after his great grandfather rather than the sport, remained focussed throughout and sealed victory with his 11th ace.
Wawrinka had right knee surgery in August and Tuesday's victory over Ricardas Berankis was his first match for six months, having only declared himself fit last weekend.
Despite clearly being way below 100 percent, 2014 champion Wawrinka remained positive.
"You don't enjoy matches like that, that's for sure. Never easy to feel that way on the court," he said.
"But I need to be still positive. I think the last 12 days was more than what I could have dreamed coming here.
"Even today my knee was feeling way better than two days ago. If I look the big picture, I know it's really positive."
Sandgren, who needed career-saving hip surgery in 2013 and has spent his career on the Challenger and Futures tours, claimed his first grand slam singles win against Frenchman Jeremy Chardy in the first round.
Now, with world number 94 Maximilian Marterer of Germany next to play, he has a great chance to reach the fourth round and is already guaranteed his biggest pay cheque of A$142,500 (82,097.41 pounds) for reaching the third round.
Inevitably, the on-court interviewer could not resist calling his win a "good day for Tennys".
"I was really happy to get my first grand slam win here, and now I've got my second. I'll go for the third one and give my best," he said. "I was definitely aptly named.
"It was my great-grandfather's name. I had to be at least half decent at the sport. I think I've done that."
(Reporting by Martyn Herman; Editing by Pritha Sarkar)
