An injured Nadal, who appeared to have tears in his eyes during a changeover while trailing 3-0 in the third set, took a medical timeout for an apparent leg injury after three games and was clearly out of sorts, failing to chase down balls that he would ordinarily return easily.
It was the second year in a row he lost in the quarterfinals here due to injury in 2010 he retired against Andy Murray due to a right knee ailment that kept him off the tour for two months, again on the Australia Day national holiday.
"This is one big victory for me, but it's not like a victory really," seventh-seeded Ferrer said on court after the match.
Nadal, who didn't bother chasing the winner on match point, won last year's French Open, Wimbledon and U.S. Open and was trying to add the Australian title so he could hold all four major trophies at once. That hasn't been achieved since Rod Laver won four in a row in 1969.
The fireworks that would have lit up the tennis world had Nadal won his fourth in a row came Wednesday night during the match Australia Day celebrations forced a 10-minute interruption while the sky outside Rod Laver was lit up by a pyrotechnics show.
As the fireworks exploded, Nadal changed his shirt and briefly left the stadium. He came back a couple of minutes later and took off his right shoe and fidgeted with his toes and sock.
After losing the second set, the usually fidgety Nadal slumped in his chair at the changeover, completely still with his head bent.
The crowd cheered almost exclusively for Nadal "Come on, Rafa," they roared, while often applauding Ferrer's errors.
All, eventually, for nothing.
Nadal came to Australia with a virus he picked up in Doha, Qatar two weeks ago. He sweated profusely in several of his matches, but appeared to be over his problems, saying after his fourth-round win over Marin Cilic that he thought he had recovered.
Murray won't have to get past Nadal this year, but he will have to beat Ferrer and either defending champion Roger Federer or 2008 champion Novak Djokovic to claim his first major title.
He advanced earlier Wednesday with a 7-5, 6-3, 6-7 (3), 6-3 win over unseeded Alexandr Dolgopolov, after Kim Clijsters and Vera Zvonareva advanced to the women's semifinals.
Clijsters, the growing favorite in the women's draw, advanced to a semifinal against No. 2 Zvonareva, whom she beat in the final at the U.S. Open last September. It will be the 10th tour meeting for the pair, with Clijsters holding a 6-3 advantage.
Clijsters had some nervous moments in her 6-3, 7-6 (4) win over No. 12 Agnieszka Radwanska. None were as bad as when some air force planes flew in formation overhead as part of celebrations for the Australia Day holiday. Cannons went off earlier when Zvonareva started the Australia Day proceedings with a 6-2, 6-4 win over Petra Kvitova.
Top-seeded Caroline Wozniacki plays Li Na of China in another semifinal Thursday, before Federer and third-seeded Djokovic meet in a night semifinal.
Dolgopolov had already beaten 2008 runner-up Jo-Wilfried Tsonga and French Open finalist Robin Soderling and has the kind of unorthodox game that can unsettle higher-ranked players.
Apart from the second set, when 2010 finalist Murray didn't lose a point on serve until he had triple set point, momentum swung frequently.
"It was very tough," Murray said. "He hits the ball different from everyone else."
Dolgopolov was able to mix up his slice and spin with deep flat shots, sometimes at the net, sometimes at the baseline, and rarely giving Murray a look at the same ball twice in a row.
Dolgopolov had 77 unforced errors, mainly because he was trying to push Murray to the extremes. In the first set, it took Murray more than 10 minutes and four set points to finally win the 12th game.
Murray spent a lot of time talking maybe swearing to himself.
"I was trying to get myself pumped up," Murray said. "It was very slow, cool conditions out on the court. You need to make sure you're moving your feet a lot when you're out there. You need to urge yourself to play a solid, stable match, not make too many mistakes."
He got the better of Murray in a 36-ball rally in the third set, saving three break points and then going on to force a tiebreaker.
Dolgopolov's coach, Australian Jack Reader, left the court after the third set and returned asking "What's going on?" when Murray had opened up a 3-0 lead in the fourth. From then, although he dropped a serve, Murray was able to remain consistent enough to win it.Clijsters is the only Grand Slam winner into the women's semis, although she's still seeking her first major title outside of America.
"I hope the experience can help me a little bit," Clijsters said. "But there are some tough players out there, we have Nos. 1, 2, 3 still in and Li Na has been playing really well. So it is going to be really tough.
Zvonareva has lost the last two Grand Slam finals, to Clijsters in New York and Serena Williams at Wimbledon.
Clijsters was up a set and a break before Radwanska rallied, winning three straight games to lead 5-4 with a chance to serve for the second set.
With six planes from the Royal Australian Air Force's aerobatic team, the Roulettes, flying overhead, Clijsters converted her fourth break-point chance to tie it at 5 and the set went to a tiebreaker.
"I think the planes kind of took me up higher!" joked Clijsters, long a crowd favorite in Australia, where she's still called "Aussie Kim." She also was engaged for a time to former No. 1-ranked Lleyton Hewitt.
Zvonareva wore a black ribbon on her hat in honor of the 35 victims of the suicide bombing at a Moscow airport this week. Her quarterfinal also featured a couple distractions.
Zvonareva and Kvitova were surprised when cannons went off in a nearby park. And Zvonareva asked that the match be stopped for a few minutes while a woman in her sight line was given medical attention in the stands, but chair umpire Mariana Alves told them to continue.
"I didn't know they were going to start this noise during our match, it was a difficult moment," said Zvonareva, who led the final set 3-0 before the disruptions but saw Kvitova level it at 4-4. "You're here to play tennis ... I was trying to keep my concentration."