While he beat Nadal just last year, Ferrer hadn't beaten him on clay since 2004, in the first of their 27 career meetings.
The sixth-seeded Ferrer next faces third-seeded Stanislas Wawrinka, who reached his first semifinals since winning the Australian Open after beating eighth-seeded Milos Raonic of Canada 7-6 (5), 6-2.
A day after becoming the 11th man in the Open era to reach 300 wins on clay, Nadal committed 44 unforced errors and was broken four times in the face of Ferrer's relentless attack. Ferrer lost his own serve three times in the 2-hour, 13-minute match.
''It was a tough loss, all losses feel bad but especially on clay,'' Nadal said. ''I didn't play the right way, I didn't have the intensity in my legs.''
''I played too short. I give him the chance to have the control of the point almost all the time. The feeling on court was not the best one.''
Nadal won eight consecutive Monte Carlo titles from 2005-12 before he lost last year's final to Novak Djokovic.
''Rafael is difficult to beat on a clay court, but not only on clay court, on all the surfaces,'' Ferrer said. ''He's not a machine, no? Sometimes he can play not so good. Maybe today he doesn't play his best tennis, and I played very good.''
Nadal struggled badly on his serve, facing 10 break points in an attritional match where the first six games alone took 45 minutes.
''I'm not playing well right now and I'm not happy with how I'm playing,'' said Nadal, who has also lost his last three matches against Djokovic in straight sets.
He dropped his opening service game, broke back in a game lasting 16 minutes, double-faulted to lose his next serve, and broke Ferrer again with a cross-court winner. Nadal saved break points in the next game, too, before making it 3-3.
The tiebreaker was all about Nadal's mistakes. He lost it by making three straight unforced errors. At one point, he threw the ball down in frustration. The first set-statistics make for ugly reading, with Nadal making only 54 percent of his first serves, and hitting a meager five winners on his normally trusty forehand.
Ferrer broke him with a neat pass down the line and held for 3-1 in the second set to seize control. A despondent Nadal then hit a sloppy forehand long to trail by 5-2.
''He played better than me. I played entirely wrong in the second set,'' Nadal said.
Serving for the match, Ferrer rushed his shots and Nadal broke back and held in a rare spell of pressure.
But Ferrer stayed calm, setting up match point with a powerful forehand winner to the right corner, and clinching victory when Nadal's backhand hit the net.
Djokovic was in action against Spaniard Guillermo Garcia-Lopez, while fourth-seeded Roger Federer was to play No. 9 Jo-Wilfried Tsonga.
Wawrinka reached the semis five years ago, losing to Djokovic.
''I know I am supposed to be among the favorites, but every time I play a match I am in the state of mind of a challenger who is trying to win an additional match,'' said Wawrinka, who went out in the third round of Masters events at Indian Wells and Key Biscayne.
- Sports & Recreation
- Rafael Nadal
- David Ferrer
- Novak Djokovic