Thiem felled the world number one Spaniard 7-6(3) 7-6(4) 4-6 7-6(6) to book his first semi-final at Melbourne Park and first at a hardcourt Grand Slam.
Having flirted with Grand Slam glory for a number of years, Dominic Thiem took another confident step toward a maiden major title by turning the tables on nemesis Rafa Nadal at the Australian Open on Wednesday.
Defeated by Nadal in the last two French Open finals, Thiem felled the world number one Spaniard 7-6(3) 7-6(4) 4-6 7-6(6) at a floodlit Rod Laver Arena to book his first semi-final at Melbourne Park and first at a hardcourt Grand Slam.
The 26-year-old Austrian will meet 22-year-old Alexander Zverev, another player saddled with great expectations from a young age.
Seventh seed Zverev felled three-times Grand Slam champion Stan Wawrinka earlier on Wednesday to reach his first major semi-final, a personal triumph he felt akin to smashing through a barrier.
Thiem was also thrilled by his own personal best in Melbourne but was not getting too carried away.
"Well, to really break a barrier, one young player has to win a Slam," he told reporters.
"One of us is going to be in the final. But it's still a very long way to go.
"I mean, (in the) other semi-final (there) is still two of the 'Big Three.' I think we are still a pretty long way from overtaking or from breaking this kind of barrier."
Defending champion Novak Djokovic and Roger Federer, two of the game's greatest ever players who share 36 Grand Slam titles between them, face off in the other semi-final on Thursday.
Regardless of who goes through, both may regard Thiem with a bit more respect after his breakthrough win over 19-times Grand Slam champion Nadal.
Thiem battled back from a break down in each of the first two sets, pounding winners from six feet behind the baseline and scrambling superbly against one of the game's most dogged hustlers.
The Austrian then held his nerve brilliantly in the final tiebreak after crumbling earlier when serving for the match.
"I'm really proud of how I stayed in the match after a very tough situation when I served for it, 5-4 in the fourth set," said Thiem.
"I really threw away that game with pretty stupid mistakes.
"That's what I'm proud of, that I overcame this small or short, weak part of my game."
Pre-tournament, few would have imagined a semi-final between Thiem and Zverev, particularly after the German's poor leadup at the inaugural ATP Cup where his serving was a mess.
Thiem said it was "funny" to face a younger guy in his first Melbourne semi-final.
"We're good friends. I'm happy for him, as well, that he's playing so good here," said the Austrian, who beat Zverev in the 2018 French Open quarter-finals.
"We have no secrets from each other ... It's a nice rivalry we have. It's great that we add an Australian Open semi-finals to this one."