The bout signalled the first time Joshua had fought in front of a full crowd in the UK since defeating Alexander Povetkin at Wembley in September 2018.
The 32-year-old put his heavyweight titles on the line against Usyk, having been instructed to do so by the WBO back in May.
However, he dropped his titles to the Ukrainian via unanimous decision, with Usyk putting in a superb display of boxing.
He was up by at least two points on all three judges’ scorecards, who scored the fight 117-112, 116-112 and 115-113.
It was only the second defeat of Joshua’s professional boxing career – and leaves the prospect of a fight against WBC and The Ring champion Tyson Fury even further away.
John Fury defends Joshua after defeat
Tyson’s father, John, defended Joshua after the bout, saying that the defeat “wasn’t all AJ’s fault”.
He explained to BT Sport: “I thought if he [Joshua] used his weight a bit more and put a bit more devil in his work, it could’ve gone better for him. I was surprised because he’s a big dude.
“He might have lost too much weight, but what he needed to do was get all over [Usyk] and put him under pressure, not letting him settle.
“When you’re plan ain’t working, it’s up to the corner to switch it up, and they never. They kept saying in the eighth round, ‘Be smart behind your jab’.
“It wasn’t working because he was in front of a master technician, and he played Usyk’s game from the beginning. They didn’t try and change it – it’s his corner’s fault.”
Addressing critics of Joshua’s performance, Fury said: “Give AJ a break. Because it wasn’t all AJ’s fault, it was his corner, they never had the brains to help him out of a sticky situation.”
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