Last year, after three years in the running as Asia's No. 1 university in the Times Higher Education rankings, the National University of Singapore (NUS) lost the title to Tsinghua University of China.
This year, it slid another two places, from 23rd to 25th globally, and was overtaken by yet another Chinese institution - Peking University - which placed second in Asia behind Tsinghua.
However, in the listings released this morning, Nanyang Technological University (NTU) improved its standing by climbing three places to 48th.
Ms Ellie Bothwell, Times Higher Education (THE) rankings editor, said "Singapore still punches well above its weight in global higher education".
"For such a small nation, to have two universities in the global top 50 is a fantastic achievement. However, NUS' slip to third place in Asia shows that even Singapore - which invests heavily in its leading universities - is not immune to the rise of China."
She added: "Singapore is well placed to continue to perform extremely well in this new and highly competitive global higher education environment, but must be willing to make the necessary investments and form the necessary strategic partnerships with international institutions."
THE's chief knowledge officer Phil Baty said that "NUS has not in any way diminished" in its performance.
He said: "It is simply the case that China's top two universities continue to make extraordinary gains, fuelled by decades of reform and investment, huge increases in research productivity, but more recently also in research quality and some important international collaborations.
"The differences between the three Asian powerhouses of Tsinghua, Beijing and NUS are very slight."
Overall, British and American universities continue to dominate the charts. The University of Oxford topped the global rankings for the fourth year running, while the California Institute of Technology (Caltech) rose from fifth to second. The University of Cambridge, Stanford University and the Massachusetts Institute of Technology (MIT) all dropped one place to third, fourth and fifth respectively.
The US once again provided 60 of the top 200, 10 of which come from the state of California alone.
An NUS spokesman said: "As Singapore's flagship university, we remain focused on our mission of educating, inspiring and transforming in the areas of teaching, research and entrepreneurship, as we strive to make positive contributions to Singapore and the global community."
This year's rankings assessed some 1,400 universities from 92 countries on 13 performance indicators grouped into five areas: teaching (the learning environment); research (volume, income and reputation); citations (research influence); international outlook (staff, students and research); and industry income (knowledge transfer).
NTU said it improved its scores in teaching and research. Said NTU's president Subra Suresh: "While the NTU community is pleased with its rapidly growing reputation around the globe by very different metrics and assessments, we are primarily driven by our passionate pursuit of impactful work in education, research and innovation."