Elsewhere, Rafael Nadal is now a set and a break up against South African Kevin Anderson.
Murray squeezed past Albert Ramos-Vinolas in a three-hour encounter on Friday and looked flat-footed as Thiem roared through the opening set with three breaks of serve in just over half an hour.
Rafael Nadal cruised into his 10th Barcelona Open final, easing out Horacio Zeballos 6-3 6-4 to book a title showdown with Dominic Thiem.
He was a break up and then down by one in the third as both players proved near impossible to shake off, but fourth seed Thiem prevailed to claim his third British scalp of the week after knocking out Kyle Edmund and Dan Evans.
Murray's defeat came a week after he exited the third round at Monte Carlo.
"He's the No. 1 in the world, so you have to find something in between playing aggressive and not making mistakes", Thiem said.
India says will 'explore all options' to bring spy Kulbhushan Jhadav back
They should be told that if this thing has happened to an Indian national today, it can happen to their national as well. Calling Jadhav a "son of India", Swaraj said the Indian government "will go out of the way to save him".
Nadal, a nine-time champion at Barcelona, said he "wasn't surprised" by Thiem's first win over Murray in three attempts.
Murray lost the deciding set in Monte-Carlo from 4-0 up, and Ramos-Vinolas picked up where he had left off by winning five of the first six games.
Thiem will be seeking his second title of the year to add to his eight career titles.
The Scott struggled to get into his stride as he dropped his serve three times in the set, Thiem ruthlessly converting three out of three break points, to his opponent's one.
Thiem fired 41 winners and six aces as the fourth seed advanced to his 12th ATP World Tour final with a first win over Murray.