The Russian could have kept alive her hopes with a straight-sets win in her final group match, but missed three match points in the second set.
Sharapova went on to win 7-5 6-7 (4-7) 6-2, but the result means Serena Williams retains the top ranking.
Caroline Wozniacki beat Petra Kvitova 6-2 6-3 in their final group match.
Wozniacki had already guaranteed a place in the semi-finals and she is joined by Radwanska, with Wimbledon champion Kvitova following Sharapova out of the White Group.
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