(CNN) -- Defending champion Andy Murray shunned two match points as he was knocked out by Canada's Milos Raonic in the semifinals of the Japan Open in Tokyo Saturday.
Murray, who beat Raonic on his way to the U.S. Open title last month, also led 4-1 in the third and deciding set and missed the pair of winning opportunities in the 12th game.
Sixth seed Raonic forced a tiebreak, which he won 7-4, to advance to the final of the hard court tournament where he will play Kei Nishikori.
The Japanese star delighted his home fans with a superb display in the second semifinal to beat Marcos Baghdatis of Cyprus 6-2 6-2.
The 21-year-old Raonic, who has moved to 15th in the world, broke Murray in the very opening game of the match to set the tone.
Murray had predicted that after his straight sets defeat of Raonic in New York that their second clash would be "much tougher" and so it proved.
But the Scot hit back to win the second on a tiebreak and when he moved ahead with a single break in the third his fears looked to have been allayed.
But Raonic broke back before he came under pressure again at 5-6, double faulting twice to give Murray his chances.
But both went begging and he took full advantage in the tiebreak to claim the biggest win of his career against the World No.3 and Olympic champion.
In other ATP Tour action Saturday, Novak Djokovic thrashed Florian Mayer in straights sets to reach the China Open final in Beijing.
The Serbian World No.2 won 6-1 6-4 to set up a clash with Jo Wilfried Tsonga of France, who led 6-1 4-1 when his semifinal opponent Feliciano Lopez of Spain retired injured.
In the women's semifinals, Maria Sharapova beat home favorite Li Na in straight sets, while World No.1 Victoria Azarenka saw off Marion Bartoli of France 6-4 6-2.