The German struggled in windy and rainy conditions on a cool afternoon in Munich, losing in two hours after Garin broke him him once in each set and saved the two break points Zverev managed.
Zverev, the Olympic champion who turns 27 on Saturday, pleaded in vain to officials to suspend the match because of the constant drizzle.
The 2017 and 2018 tournament winner had also lost to Garin in the same round in 2019, with the South American going on to lift the trophy.
"It is impossible for me to win in such weather. I tried everything. But in such conditions I have no weapons to win here," Zverev said, adding that Garin "deserved to win".
Garin now faces third seed American Taylor Fritz, who edged Briton Jack Draper, 4-6, 6-3, 7-6 (7-1). Danish title holder Holger Rune defeated Swiss player Marc-Andrea Hülser, 6-4, 7-6 (7-3).
Rune doesn't know his semi-final opponent yet because the final match between Jan-Lennard Struff and Felix Auger-Aliassime was abandoned due to darkness, with Germany's Struff up 7-5, 3-1 against his Canadian opponent.
Casper Ruud and Stefanos Tsitsipas both won their quarter-finals at the Barcelona Open to remain on course for a meeting in a second straight final.
Ruud beat Matteo Arnaldi 6-4, 6-3 to notch his season-leading 27th win. The sixth-ranked Norwegian has two more wins than Jannik Sinner. Tsitsipas saved two match points to rally past Facundo Díaz 4-6, 6-3, 7-6 (10-8).
Emma Raducanu's progress in the Stuttgart Open was halted in straight sets by world No 1 Iga Swiatek.
The Polish four-time grand slam champion, in her 100th week on top of the ATP world rankings, prevailed 7-6 (7-2), 6-3 to set up a semi-final showdown with Kazakhstan's Elena Rybakina.
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