He went up 2-0 in the fourth when he hit a passing backhand down the line on break point with Dimitrov standing at the net. At the end, Dimitrov appeared to wipe tears from his eyes with a towel as he walked off Rod Laver Arena.
Nadal acknowledged that Dimitrov let him off the hook with a wide forehand on set point in the third-set tiebreaker.
"It's a tough moment mentally for an opponent," Nadal said. "If that forehand from him goes in and he wins the third, I'm going to be fighting."
Dimitrov said: "I'm a bit shattered. I came out expecting nothing less than to win."
Azarenka's loss meant both defending champions went out in the quarterfinals -- Novak Djokovic lost to Stan Wawrinka on Tuesday, ending his bid for a fourth consecutive men's title. Azarenka had been aiming for three in a row and other women's title contenders Serena Williams and Maria Sharapova didn't even reach the quarterfinals.
Azarenka's defeat left 2011 French Open champion Li Na as the only major winner in contention. Li, a two-time Australian Open finalist, next plays 19-year-old Canadian Eugenie Bouchard. In the other semifinal, Radwanska takes on No. 20 Dominika Cibulkova, who routed No. 11-seeded Simona Halep 6-3, 6-0.
Radwanska mixed up her game cleverly to keep Azarenka off balance, and never let her settle into the game.
"She was aggressive. She was making everything. She was guessing right," Azarenka said. "I was just playing a little bit too predictably."
Warwinka plays Tomas Berdych in the first men's semifinal Thursday, with Federer and Nadal set to play Friday night.
"We've had some epics over the years," Federer said of the semifinal. "I hope we can slug it out here in a couple of days."
