The Yamaha rider crashed on the fifth lap of the race at Assen while trying to overtake Aprilia’s Espargaro on the inside of Turn 5.
Quartararo lost the front and slid into Espargaro, who was forced onto the gravel and lost over eight seconds as he re-joined in 15th.
Points leader Quartararo also remounted, but pulled into pitlane a few laps later due to damage on his bike – before being sent out by his team in case the race was red-flagged or it started to rain.
However, a few laps after that he crashed again at Turn 5, with Quartararo convinced his traction control sensor was broken.
While Espargaro recovered to fourth and is now only 21 points behind Quartararo in the standings, the Frenchman has been handed a long lap penalty to be served at the British Grand Prix in August.
This is the first time since the Catalan GP last year that Quartararo has been hit with a penalty for an in-race incident when his leather suit burst open in the latter stages of the Barcelona race.
Quartararo’s exit from Sunday’s Dutch GP also marked his first retirement since the 2020 Valencia GP.
Following the Dutch GP, Quartararo questioned his team’s decision to send him out again after his first crash and admits he feels “lucky” not to have broken any bones in the second crash.
“I don’t know,” Quartararo said when asked why he was sent out again after pitting.
“Basically I was one lap after everybody, the team told me to go because maybe the rain was coming.
“But as soon as I went out I said I’d push again, but I [already] came back in because I felt a problem.
“But we go out again and I feel lucky to not have something broken after that. Was not my decision, because if I stop it’s to stop. But this is another thing.”
Quartararo branded his crash with Espargaro as a “rookie mistake” and felt the Aprilia rider should have won Sunday’s race given the pace he then showed fighting back through the pack to fourth.