The Austrian fifth seed won three tiebreaks as he shocked the Spaniard 7-6, 7-6, 4-6, 7-6 at Melbourne Park.

Thiem impressively built a two-set lead before top seed Nadal battled back to clinch the third.

In the fourth, Thiem forced an early break and served for the match at 5-4, only to allow the Spaniard back into the contest.

He regained composure to win the third tiebreak, however, and can now look forward to a semi-final with Germany's Alexander Zverev.

Thiem has twice reached the French Open final but is still searching for a maiden Grand Slam success.

The 26-year-old is seen as one of the big hopes to break the monopoly in the men's game held by the power trio of Nadal, Roger Federer and Novak Djokovic.

Nadal, who won the Australian Open in 2019, was hoping to match Swiss legend Federer's 20 Grand Slam titles but he will leave Melbourne still one adrift.

"All the match was on a very good level, we both were in great form, that's what can happen with two players in that form," said Thiem.

"I felt I was lucky in the right situations. 

"It's necessary as he's one of the greatest of all time, one of the biggest legends in this sport, so you need a little luck to beat him."

Seventh seed Zverev reached his maiden Grand Slam semi-final as he came from behind to beat Switzerland's 2014 Australian Open champion Stan Wawrinka.

The 15th seed and three-time Grand Slam winner made a lightning start but was seen off 1-6, 6-3, 6-4, 6-2.

In the women's draw, Romania's Wimbledon champion Simona Halep booked her place in the semi-finals by easing past Estonia's Anett Kontaveit.

The fourth seed beat the 28th seed 6-1, 6-1 as she looks to win a third Grand Slam title.

"It's a pleasure to play in Australia and I'm really happy to play my best tennis and go through to the semi-finals," said Halep.

"I felt great today on court, I feel my game, I feel strong on my legs and I knew how to play against her. 

"I've just been focused on every game I played, and I really enjoy playing here in Melbourne."

Halep will take on two-time Grand Slam winner Garbiñe Muguruza in the semi-finals after her victory over Russia's 30th seed Anastasia Pavlyuchenkova.

The unseeded Spaniard came through 7-5, 6-3.

Both women's semi-finals are tomorrow.

In the first match Australia's top seed and world number one Ashleigh Barty will take on American 18th seed Sofia Kenin.

Barty is hoping to become the first home winner of a singles title in Melbourne for 42 years.

The first men's semi-final between Serbia's defending champion Djokovic and Federer will also take place.