Dimitrov, 23, scored 6-1 7-6 (7-4) 6-2 against Murray in two hours and one minute and reach his first Grand Slam semi-final.
Murray was looking to reach his sixth consecutive semi-final. Last year, Murray become the first Briton since Fred Perry in 1936 to win the men's singles.
The 11th-seeded Dimitrov broke Murray five times - including in the final game. It was his first victory over a top 10 player at a Grand Slam.
Prince William and his wife Kate watched the match from the Royal Box and were visibly upset when the Scot lost the match.