Novak Djokovic suffered his first loss at the Masters 1000 level since 2014 as the top seed went down to Roberto Bautista Agut 6-4 6-4 on Saturday in Shanghai.
Djokovic last lost a Masters semi-final in Shanghai two years ago to Roger Federer.
Defeat for the world No.1 tightens the race for the year-end top ATP ranking with rival Andy Murray closing in the points' chase.
The Scottish second seed will play Frenchman Gilles Simon in the second semi-final.
Djokovic, whose world-beating form has dropped off a cliff in recent months due to injury and mental distractions off-court, saved three match points while trailing a set and 3-5 in the second.
The Serb, who had smashed a racquet and then politely picked up the pieces after dropping the first set to the Spanish 15th seed, managed to break for 4-5 in the second set.
But Bautista Agut found his way into his first Masters final a game later, advancing on his fourth winning chance.
The top seed was playing his first event since losing the US Open final more than a month ago, with his form patchy all week.
Djokovic stood 5-0 over Bautista Agut heading into the semi. They last met this year in the fourth round at Roland Garros, with Djokovic rallying from a set down to win in four.
Djokovic was playing his seventh Shanghai semi-final in as many years and missed the chance to reach his 10th final of the season in which he had won seven titles.
Bautista Agut played a Masters semi two years ago in Madrid, losing to Rafael Nadal. He will be playing his fourth final of the season after winning his 48th match of 2016.
