Sanchez was then cleared to fight Josh Koscheck at "UFC 69". At the weigh-ins for the event, Sanchez shoved Koscheck while they stared each other down. Sanchez ended up losing a unanimous decision to Koscheck, ending his undefeated run, in a fight that was virtually all stand up. Koscheck managed to keep Sanchez at bay with superior hand speed and footwork until the bout timed out, to take the win 30–27 on all three judges' cards. Several weeks after the fight, Dana White announced that Sanchez was sick on the eve of the fight and almost had to retire when a test came back indicating he had Hepatitis C. Doctors eventually concluded the test results were not correct, but could not diagnose his sickness, so the fight went ahead as planned. The day after the fight Sanchez had a hole in his thigh the "size of a coffee cup" and was diagnosed with a staph infection.