Despite Murray threatening a fightback after taking the second set to take the match to a final-set decider, Austrain Thiem held his nerve to record a 6-2, 3-6, 6-4 victory on clay.
Murray's defeat came a week after he exited the third round at Monte Carlo. That loss prompted Murray to enter Barcelona to whip up some form for the French Open following a right elbow injury.
Nine-time winner Rafael Nadal played Horacio Zeballaos of Argentina in the other semifinal later Saturday.
Thiem started strong, breaking Murray's first two service games before adding a third break en route to taking the first set.
The ninth-ranked Thiem had a break point in the second set, but Murray held serve and broke him back to even the match at a set apiece.
Murray was again in trouble at 4-2 down in the decisive set, and folded when he failed to successfully return Thiem's deep lob on match point.
It was Thiem's first win in three meetings against Murray.
Additional reporting by the Associated Press.